Power factor measures how efficiently a site turns the electricity it draws into useful work. When it is poor, the site pulls more current than it productively uses, and pays for that twice: through reactive power charges, and through an inflated capacity figure. Correcting it is equipment and a calculation, not a change to how the business runs.
Verification
- Verified as at:
- Source:
- DNO use of system charging statements, published annually by each of the fourteen distribution network operators; supplier written confirmation held on file
- Last reviewed by:
- Omnium
Figures in this sheet were current at the verification date above. Regulated charges reset each April. If you are relying on a figure, check the source or ask us.
Designed A4 fact sheet, ready to print or circulate.
What power factor is
Equipment with motors, transformers, refrigeration, pumps, air conditioning and lifts draws two kinds of power. Real power does the work. Reactive power sustains the magnetic fields the equipment needs, and does no useful work itself.
Power factor is the ratio between the two. A power factor of 1.0 means everything drawn does useful work. At 0.8 the site is drawing noticeably more current than the work requires. The lower it goes, the more wasted current flows across the meter.
How a poor power factor costs you
| Mechanism | What happens |
|---|---|
| Reactive power charges | Many half-hourly tariffs bill reactive power, measured in kVArh, as a separate line. A poor power factor means more of it, every month. |
| Inflated apparent demand | Capacity is measured in kVA, which combines real and reactive power. A poor power factor inflates the kVA a site appears to need, pushing up the capacity it must reserve and the daily charge on it. |
| Wasted headroom | Correcting power factor often frees capacity, which can then be right-sized separately. |
| Cable and equipment strain | Higher current means more heat and more loss in the site’s own wiring and transformers. A smaller effect, but a real one. |
How reactive power is charged is a distribution matter, not a supply one. Each of the fourteen distribution network operators publishes its own charging statement, reset every April, and both the method and the trigger point differ by region. A power factor below about 0.95 is a common trigger, not a universal one, and the applicable statement is the thing to check rather than a rule of thumb.
A fully fixed contract does not fix this
Status: LawWhere a supplier offers a genuinely fully fixed product, reactive power and exceeded capacity charges remain pass-through. We hold that position in writing from the supplier concerned, and it applies to the fully fixed products we have confirmed rather than to fully fixed products generally.
The practical consequence is that a site can hold a contract described as fully fixed and still carry this exposure in full. It is worth establishing per supplier and per product rather than assuming, and we ask the question that way.
How to tell whether you have a problem
The signal is on the half-hourly data and on the bills. A reactive power charge appearing as its own line. A measured power factor below the trigger point in your operator’s charging statement. An apparent demand in kVA sitting noticeably above the real power in kW that the site actually uses.
Those are the figures we examine. Where the power factor is healthy there is no case for correction, and we will say so.
The fix, and when it does not pay
For most sites the correction is power factor correction equipment installed at the main distribution board: capacitor banks, or harmonic-tolerant equipment where variable speed drives are present. It supplies the reactive power locally, so the site stops drawing it across the meter. The power factor rises, the reactive charge falls or disappears, and the apparent kVA demand comes down.
It is a capital item, so the question is always payback. That is calculated per site from the actual reactive charges on the tariff, the severity of the power factor, and the installed cost. We do not quote a payback range, because the range depends entirely on the site and a general figure would tell you nothing about yours.
Where the case does not stack up we will say so rather than recommend equipment that does not earn its place.
Kept separate on purpose
Power factor is its own line of enquiry. If a site has both a poor power factor and oversized capacity, those are two separate opportunities with two separate mechanisms, and we quantify them separately.
Blending them would make it impossible to say afterwards which change produced which saving, and a saving nobody can attribute is one nobody can verify.
Installation is carried out by a specialist contractor. We specify the equipment, manage the install and confirm the improved power factor on subsequent bills.
Related sheets
- Network charges and agreed capacity
Why regulated network charges rose sharply in April 2026, and why the capacity you reserve is a lever most businesses have never pulled.
- Non-commodity charges
Taxes, levies and regulated network charges now make up a large share of a business electricity bill, and comparing unit rates alone misses where the cost sits.
- Reading your energy bill
What every line on a commercial gas and electricity bill means, so you can check it is right and see which parts you can influence.
Take this sheet into a meeting
Power factor and reactive charges is available as a designed A4 fact sheet, dated and set for printing or circulation.
If this sheet raises a question about your own sites, speak to us.