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What is Power Factor? Why we pay for power we're not using

July 11, 2022

You are actually paying for more power than you’re using, and something called power factor is to blame. Not only does this make your electricity bill more expensive, power factor also increases our collective carbon footprint significantly. The good news: anyone can understand what power factor is, and how to reduce it.

See below for an image of how Hydro One (in Ontario, Canada) calculates electrical charges for commercial and industrial buildings, and accounts for power factor as well. A power factor rating of 97% means that 3% of generated power was lost as "reactive power".

Image Source

Power Factor Explained

Let's start with the basics. There are two types of electricity: our power grids distribute alternating current (AC) electricity to homes and buildings, and the second type of electricity is called direct current (DC) power. AC electricity involves a current that oscillates between positive and negative voltages as it travels through cables. Depending on the country you're in, AC power alternates 50 - 60 times per second. See the image below.

Time and voltage graph for AC electricity
Alternating Current (AC) Power

DC power has no frequency, and constantly remains at the same positive voltage level.

Time and voltage graph for DC electricity
Direct Current (DC) Power

AC circuits involve "reactive components", and AC electricity reacts with these components. This reaction between components and electricity creates "friction", which generates heat. You might know that, where heat is produced, energy is exerted. This is why AC electricity inherently loses some of it's power as it travels through a circuit. The electricity lost due to these reactions is called "reactive power".

In order to calculate the amount of reactive power, or lost power, in an electrical system, one would calculate power factor. Power factor is the ratio of active power (that can be used by the consumer), to reactive power.

To get a better understanding of reactive power losses, often the analogy of a beer glass is used. Take a look at the image below:

Power factor explained with the analogy of a beer glass.
Power Factor Analogy

So why do electrical companies send out more power than consumers use?

The answer lies in the power factor ratio; electrical companies need to know how much power will be lost for the amount of electricity that they generate. They can't help that electricity will be lost along AC power lines as reactive power (it's just the reality of physics), so they have to take this loss into consideration when deciding how much power will be needed.

The consideration of power factor allows power companies to accurately generate enough active power for the demands of consumers. In AC systems, power companies must make up for reactive power losses due to a poor power factor by sending more energy than will be actively used by the consumer. Power companies predict how much power will be lost due to reactive power losses, and then generate and transmit enough power to make up for these losses.

Not only does this impact our electrical bills, it also has broader implications for the environment.

As you can see, it's not only the individual consumption of electricity that needs to be optimized in order to reduce our energy consumption as a society, and emit less carbon into the atmosphere. We also need to consider the technology involved in boosting the electrical efficiency of power transmission lines. Improving technology involved in power lines could bring the power factor ratio closer to 100% active power, and help us meet global carbon emission reduction targets. To simplify this with our beer analogy, a power factor of 1 (or 100%) would mean that the beer has no foam at all. But a power factor of 50% (0.5), for example, would mean that a beer glass would be half filled with foam/head, and so you would only get half a glass of beer that you could actually consume. Therefore, we want to have as little reactive power in transmission lines as possible (or, a beer glass with as close to 0% foam as possible).

Power lines at sunset

So what technology could make power transmission lines more efficient?

As I mentioned earlier, there are two types of electricity: AC electricity (which we already discussed), and DC (direct current) electricity. DC electricity has no frequency, and is therefore made up of entirely active power. So, as it travels through transmission lines, it has very minimal power losses, and no reactive power losses. Because DC power contains only active power, the power factor doesn’t need to be taken into consideration in DC systems, and electrical companies don't need to account for it when generating DC power. Therefore, if power companies generated entirely DC power, and distributed it to homes and buildings, we wouldn't have to pay for electricity that doesn't make it to our power loads.

Although we do already have many DC power transmission grids, there are some technological challenges that need to be resolved before they can be used to distribute power directly to buildings. Once they are ubiquitous less energy will need to be produced in order to meet the same consumer demands, thus reducing our carbon emissions as a society.

Fun fact: DC power is generated by some renewable sources such as solar panels

So what can you do now?

If you own a commercial, industrial, or multi-family residential building (like an apartment complex), you can distribute DC electricity throughout your building locally by converting the AC electricity your building receives, into DC electricity at the panel level.

Argentum's DC distribution system easily connects at the electrical panel level, makes one highly efficient conversion to DC power, and then distributes DC power to your building systems and devices. Because about 80% of our modern devices use DC power, this means that your devices will be getting the type of electricity they need, and not have to inefficiently convert the AC power they get into DC power individually. Argentum's system provides an easy to implement solution for buildings looking to reduce operating costs, and energy consumed.

Contact us on our website to learn more about DC power and how our solution can optimize your buildings energy performance. We also have many case studies on our website, so you can see how we've helped other building owners and managers reduce energy and maintenance costs.

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Erin Kelly

Erin is the Creative Director at Argentum Electronics. She has a New Media degree from the University of Toronto and 5 years of experience in the communications field. From 2017 - 2019 she worked with a manufacturing company on their YouTube content and strategy, and has done digital content creation for dozens of clients through her own business called Story Unlocked. Erin has built two computers, and loves technology, especially when it makes the world a better place.

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