What is Power Factor Correction?

What is power factor correction?

Power factor is a measure of how effectively the power is being used in a circuit. It is often presented as a ratio or power triangle that shows the actual power, or true power being used, versus the apparent power, or the total amount supplied. The goal of a power factor correction unit in a circuit is to align the voltage and current waveforms close to unity (0.98-0.99)

Lagging power factor: (where the current lags behind the voltage in the circuit) is most often caused by magnetic fields of inductive loads, such as motors or motor coils of any design. It's in these magnetic fields that reactive power is created to run the motors.

Reactive Power: is also known as magnetizing power, and doesn’t contribute to useful work except for running the motors. It oscillates between the consumer and the energy provider at twice the network frequency and thus loads the network (apparent power) with unusable power. The more inductive loads you have, the more reactive power there will be oscillating.

Leading power factor: (where the current leads the voltage in the circuit, or over corrected) is most often caused by small capacitors used to help smooth out AC to DC in power supplies and drivers. Capacitors provide a leading current to compensate for the lagging current required by the inductive load. An example of where AC to DC power transfer occurs is in LED lighting, where a bay of 30+ LED panel lights can generate sufficient capacitive load to overcorrect the power factor. This capacitive load can have an equal reactive power effect to that of a small coil motor. In a site where more LEDs, drivers, or power supplies are present, is it more likely that leading power factor will occur.  

Having either a leading or lagging power factor is a direct contributor to power quality due to excessive reactive power in the circuit.

How do PFC units work?

Capacitor Based:

In commercial and industrial power networks, the most prevalent power factor is lagging power factor. Lagging power factor can be easily corrected by introducing a capacitive load into the system using capacitors. A power factor controller monitors the voltage and current usage of the network and calculates the power factor. The controller is programmed to maintain the PF within set limits; normally 0.98 lagging. As the power usage fluctuates, the controller will switch pre-set capacitor banks in and out as required.

S.V.G:

Detects the phase angle difference and injects the appropriate leading or lagging current in real time, and will also correct the harmonic distortion in the waveform (much like how noise-cancelling headphones work). An SVG uses inverter technology to rapidly and precisely convert the DC and AC power to inject or absorb reactive power. This ensures the system maintains the power factor set point and adapts in real time to changes in load conditions.

Hybrid:

This is achieved by mixing the standard capacitive-based system with an SVG. This provides very good and even power factor correction for dynamic loads using the SVG and also corrects the base load with the slower-reacting capacitor banks. Advantages of this system is accurate correction of both lagging and leading power factor while keeping maintenance costs and heat generation to a minimum. 

Power Factor Correction in New Zealand

Power factor correction systems and specialists have been in New Zealand at least since the 1970s. The interest in power factor correction has been increasing over the last decade as more infrastructure, modern equipment and processing plants have been putting a squeeze on our power infrastructure. 

Power factor may be an overlooked aspect of electrical systems, but it has very real implications for efficiency, power quality, and cost. Particularly in New Zealand’s power market, where network companies are enforcing PF standards and levying charges for excessive reactive power usage. A facility with a poor power factor is drawing more current than necessary, wasting capacity in both its own electrical distribution and the grid’s infrastructure. This results in higher losses, potential voltage instability, and monetary penalties or demand charges that can cut into the bottom line.

The good news is that power factor correction is a well-established and generally straightforward solution. By installing appropriate PFC equipment, whether traditional capacitor banks, modern SVG units, or a hybrid combination, businesses can align their voltage and current waveforms, bringing PF closer to unity (0.98–0.99 typically) and thereby minimising reactive power flow. The benefits include immediate cost savings on electricity bills, improved voltage stability, reduced losses and heating, and compliance with utility requirements. Moreover, advanced PFC solutions can tackle multiple power quality issues at once: for example, an SVG can eliminate PF penalties while also filtering harmonics and balancing phase loads, resulting in a cleaner and more reliable power supply within the facility.

When implementing power factor correction, it’s important to assess the unique load profile of the site. No single solution fits all scenarios. Some sites may correct their PF sufficiently with a properly sized automatic capacitor bank. Others, especially those with highly fluctuating loads or significant nonlinear equipment, may find that investing in an active solution or a hybrid system provides better long-term value and performance. Facility managers and electricians should work with power quality specialists or engineers to interpret their power usage data (often available from smart meters or power logger surveys) and determine the most effective PFC strategy. Typically, improvements can be quantified in advance – one can calculate expected charge savings and sometimes even reductions in transformer loading or I²R losses. Many PFC investments in NZ have short payback periods, especially after the rise in reactive power charges. We have seen most units pay themselves off within 18 months of installation.

In summary, maintaining a good power factor is a smart operational and financial move. In the context of New Zealand’s energy future, which emphasises efficiency, resilience, and reducing waste, power factor correction is a practical step that helps “clean up” the way we use electricity.