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Can you really reduce kVA billing after installing power capacitors?

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Stubborn factory owners

This technical article I dedicate to stubborn factory owners who still don’t believe and don’t want to spend the money on optimizing the factory costs.

Can you really reduce kVA billing after installing power capacitors?
Can you really reduce kVA billing after installing power capacitors? (Photo credit: E. Csanyi)

Not all of them are like that, but the most of them ‘not-much-electrically-educated’ are. So, let’s start with explaining.

The fact is that power capacitors provide many benefits, and among them //

  • Reduced electric utility bills
  • Increased system capacity
  • Improved voltage
  • Reduced losses

Reduced utility bills is not an imagination

Your electric utility provides working (kW) and reactive power (kVAR) to your plant in the form of apparent power (kVA).

While reactive power (kVAR) doesn’t register on kW demand or kW hour meters, the utility’s transmission and distribution system must be large enough to provide the total power. Utilities have various ways of passing the expense of larger generators, transformers, cables, switches, and the like, along to you.

As shown in the following case histories, capacitors can save you money no matter how your utility bills you for power.

kVA billing

In case you didn’t know, the utility measures and bills every ampere of current, including reactive current. Let’s observe the optimizing costs in the following two cases, but before this, please jump and read what’s common for beer mug and power factor? Your eyes will open :)


Case 1 //

Assume an uncorrected 460 kVA demand, 480V, three-phase at 0.87 power factor (normally good).

Billing:
$4.75/kVA demand
Correct to 0.97 power factor

Solution:
kVA × power factor = kW
460 × 0.87 = 400 kW actual demand
kW = kVA PF
400 = 412 corrected billing demand 0.97

From Table 1, kW multipliers, to raise the power factor from 0.87 to 0.97 requires capacitor:
Multiplier of 0.316 x kW
0.316 x 400 = 126 kVAR (use 140 kVAR)

Uncorrected original billing:
460 kVA × $4.75 = $2185 / month – $1957
= $ 228 / month savings × 12
= $2736 annual savings

Corrected new billing:
412 kVA × $4.75 = $1957/month
140 kVAR, 480V capacitor cost: $1600 (installation extra).

This capacitor pays for itself in less than eight months.

Case 2 //

Assume the same conditions except that:

  • 400 kW at 87% = 460 kVA
  • 400 kW at 97% = 412 kVA corrected billing

kVA demand charge:
$1.91 / kVA / month (112,400 kWh / month energy consumed)

Energy charge:
$0.0286 / kWh (first 200 kWh / kVA of demand)
$0.0243 / kWh (next 300 kWh / kVA of demand)
$0.021 / kWh (all over 500 kWh / kVA of demand)

Uncorrected:
460 kVA × $1.91 = $878.60 – $786.92
$ 91.68 savings in demand charge

Corrected:
412 kVA × $1.91 = $786.92

Uncorrected energy:
kWh = 112,400
460 × 200 = 92,000 kWh
at 0.0286 = $2631.20

460 × 300 = 138,000
but balance only = 20,400
at $0.0243 = $495.72

$2631.20 + $ 495.72
$3126.92 uncorrected energy charge

Corrected energy:
kWh = 112,400
460 × 200 = 82,400 kWh
at 0.0286 = $2356.64

460 × 300 = 123,600
but balance only = 30,000
at $0.0243 = $729.00

$2356.64 + $ 729.00
$3085.64 corrected energy charge

$3126.92 – $3085.64
$ 41.28 savings in energy charge due to rate charge

(9600 kWh in first step reduced by $0.0043)

This is not a reduction in energy consumed, but in billing only.
$ 41.28 energy – $ 91.68 demand
$ 132.96 monthly total savings × 12  = $1595.52

A 130 kVAR capacitor can be paid for in less than 14 months.

Table 1 //

Multipliers to Determine Capacitor Kilovars Required for Power Factor Correction

Multipliers to Determine Capacitor Kilovars Required for Power Factor Correction
Table 1 – Multipliers to Determine Capacitor Kilovars Required for Power Factor Correction

Installing a capacitor bank (VIDEO)

Reference // Power factor correction: a guide for the plant engineer – ABB

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About Author

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Edvard Csanyi

Edvard - Electrical engineer, programmer and founder of EEP. Highly specialized for design of LV/MV switchgears and LV high power busbar trunking (<6300A) in power substations, commercial buildings and industry fascilities. Professional in AutoCAD programming. Present on