Power factor is an expression of energy efficiency. It is usually expressed as a percentage—and the lower the percentage, the less efficient power usage is.

Power Factor (PF) is the ratio of working power, measured in kilowatts (kW), to apparent power, measured in kilovolt amperes (kVA). Apparent power, also known as demand, measures the amount of power used to run machinery and equipment during a certain period. It is found by multiplying voltage (V) by current (A). The result is expressed as kVA units.

**kVA = V x A**

PF expresses the ratio of true power used in a circuit to the apparent power delivered to the circuit. A 96% power factor demonstrates more efficiency than a 75% power factor. PF below 95% is considered inefficient in many regions.

PF expresses the ratio of true power used in a circuit to the apparent power delivered to the circuit. A 96% power factor demonstrates more efficiency than a 75% power factor. PF below 95% is considered inefficient in many regions.

## Understanding the Electric Power Formula

Understanding the electric power formula will help teams increase efficiency and make better, more informed decisions about the use of electrical energy.

The electrical power formula is:

**P = V x I**

In this equation, I is the electrical current, V is the voltage, and P is the total electrical power.

The power formula expresses the amount of real power that is delivered by devices. This makes it crucial for understanding exactly how electrical energy is consumed and measured in electrical systems.

Understanding the electric power formula also gives users the foundation for grasping what real power means. That’s a crucial step toward understanding why the power factor, which relates to the ratio of real power to apparent power, is so important.

It’s a best practice to first make sure your teams have a solid understanding of the electric power formula before moving on to the power factor formula. Following this order ensures that teams can easily grasp how electrical measurements relate to real power. It also ensures they fully understand the connections between voltage, current, and power before they attempt to calculate power factor.

## How to Make Sense of Power Factor

Understanding power factor can be a complex concept, but it can be simplified with a relatable analogy. Imagine a glass of beer. In this analogy, different parts of the beer and the glass represent different types of power in an electrical system.

**Beer** is active power (kW) — the liquid beer is useful power. This is the energy doing the work, which is the part you want.

**Foam** is reactive power (kVAR) — the foam is wasted power or lost power. It’s the energy being produced that isn't doing any work (such as heat or vibrations).

**The mug** is apparent power (kVA) — the mug is the demand power, or the power being delivered by the utility.

If a circuit were 100% efficient, demand would equal the power available. But when demand is greater than the power available, a strain is placed on the utility system. Many utilities add a demand charge to the bills of large customers to offset differences between supply and demand (where supply is lower than demand). For most utilities, demand is calculated based on the average load placed within 15 to 30 minutes. If demand requirements are irregular, the utility must have more reserve capacity available than if load requirements remain constant.

Peak demand is when demand is at its highest. The challenge for utilities is delivering power to handle every customer’s peaks. Using power at the moment it's in highest demand can disrupt overall supply, unless there are enough reserves. Therefore, utilities bill for peak demand. For some larger customers, utilities might even take the highest demand and apply it across the full billing period.

Utilities apply surcharges to companies with a lower power factor. The costs of lower efficiency can be steep — akin to driving a gas-guzzling car. The lower the power factor, the less efficient the circuit, and the higher the overall operating cost. The higher the operating cost, the higher the likelihood that utilities will penalize a customer for overutilization. In most Alternating Current (AC) circuits, there is never power factor equal to one because there is always some impedance (interference) in the power lines.

## How to Calculate Power Factor

To calculate power factor, you need a power quality analyzer or power analyzer that measures both working power (kW) and apparent power (kVA). With this data, you can calculate the ratio of kW/kVA.

### Power Factor Formula

The power factor formula can be expressed in multiple ways. For example:

**PF = (True power)/(Apparent power)**

or

**PF = W/VA**

In the second equation, W is a measure of useful power, while VA is a measure of supplied power. The ratio of the two is essentially useful power to supplied power, or:

As this diagram demonstrates, power factor compares the real power (or power available to perform work) being consumed to the apparent power, or demand of the load. You can avoid power factor penalties by improving power factor.

Poor power factor means that you’re using power inefficiently. This matters to companies because it can result in:

- Heat damage to insulation and other circuit components
- Reduction in the amount of available useful power
- A required increase in conductor and equipment sizes

Finally, a low power factor increases the overall cost of a power distribution system because it requires a higher current to supply loads.

By understanding and improving power factor, companies can achieve significant cost savings and enhance the efficiency of their electrical systems. Investing in power quality analyzers and implementing power factor correction measures can lead to lower utility bills and reduced strain on the electrical infrastructure.