Energy efficiency in a building is a sum of various elements. One that is most important is Power Factor. Power Factor simply put is the measure of how efficiently a building uses its electrical power. We use a triangle to calculate that efficiency in a building or industry. This triangle is composed of real power measured in kW, apparent power measured in kVA and reactive power measured in kVAR. The use of motors in office buildings (like HVAC systems), and industries, utilizes reactive power that needs to be supplied by the utilities generators. Since they bill you for real power consumed kW, and you are using more reactive power kVAR, they are going to penalize you, because you are being inefficient in your use of electrical power. That is why your bill comes in with a penalty from the utility in proportion of your efficiency. The rate of efficiency of electrical power usage in a building or power factor, ranges from 1 (or 100%) and 0 (or 0%). It is impossible to be 0% efficient in a building since you have various elements that affect that ratio. It depends mainly on the electrical utility, but in most cases when you are below or at 0.85 power factor you get a penalty in your electrical bill.
So how do you solve this? Well, first you have to do an energy audit. Most people with experience can give you a solution by reading your electrical bill, but it is preferable to do an energy audit and measure your power factor for a week along with other power quality elements like harmonics to give you a good and permanent solution. If your power factor stays fixed (it does not oscillate during the day) during this analysis, you can propose a fixed capacitor bank at the main. If it oscillates during the day, you have to install an automatic capacitor bank. This ensures that you have the right amount of reactive power as needed in your process, and also reduces the risk of high voltages in the system, caused by a large amount of reactive power being injected in to the system.
There is another scenario that you have to be aware of in this analysis and that is the presence of harmonics in your system. I am going to go in some detail on this issue in a further post, but in broader terms harmonics can damage your capacitor bank if it enters in resonance with your capacitors. This can cause your capacitors to explode and can be a life threatening hazard. There are various solutions to deal with harmonics in your system; one of them is to install an active harmonic filter. This will help you cancel out the harmonics on your system and help you not to worry about having problems with your capacitor bank.
Eaton Electrical has published a very good guide that explains in very simple terms these issues. If you are interested in reading it click this link.
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