The short version
- Industrial connections are billed on two things: the units you consume, and the maximum demand the network had to be sized for.
- A poor power factor inflates the second one without changing the first. You pay for capacity you never used.
- The threshold is commonly 0.90 lagging, but check your own tariff — the structure varies by DISCO and by tariff category.
- The fix is usually a capacitor bank, and it is one of the shorter paybacks in a factory.
- Do a harmonic check first. On a site with drives and inverters, an untuned bank can make things worse.
A domestic bill has one meaningful number on it: units. An industrial bill has several, and one of them is quietly costing many factories real money every month.
This is the least glamorous saving available to an industrial consumer, and frequently the fastest.
What is power factor, without the textbook
A resistive load, like a heater, uses essentially everything it draws. An induction motor does not. It needs magnetising current to build the field, and that current flows back and forth without doing work. The wires, the transformer and the switchgear all have to be big enough to carry it anyway.
Why a low power factor costs money
Industrial tariffs in Pakistan generally bill two separate things: energy in kWh, and maximum demand in kVA. Demand charges are applied to kVA precisely because that is what the network was sized for.
| Power factor | For 100 kW of real work | Effect |
|---|---|---|
| 0.95 | ≈ 105 kVA | Comfortably above threshold |
| 0.90 | ≈ 111 kVA | At the usual threshold |
| 0.80 | 125 kVA | 25% more capacity than work done |
| 0.70 | ≈ 143 kVA | 43% more, plus penalty exposure |
Below the threshold, a surcharge usually applies on top. So a poor power factor hits you twice: a bigger demand figure, and a penalty on it.
One honest caveat: the exact threshold, the surcharge formula and how maximum demand is measured differ between distribution companies and tariff categories, and they change. Read your own bill and your own tariff schedule. Anyone quoting you a single universal penalty figure for all of Pakistan is guessing.
Send us a bill and we will tell you what your power factor is costing
Send a photo of a recent industrial bill — both sides. We will read the demand and power factor lines and give you a figure, whether or not you buy anything from us.
What drags it down
- Induction motors running lightly loaded. The worst single cause. A motor at 30% load has a far worse power factor than the same motor at 80%. Oversized motors are everywhere.
- Welding sets — intermittent, and hard on power factor while they run.
- Old transformers, particularly when lightly loaded.
- Arc and induction furnaces, which are their own category of problem.
- Fluorescent and discharge lighting on magnetic ballasts.
The fix, and the trap in it
The standard answer is a power factor improvement capacitor bank — capacitors supplying the magnetising current locally so it is not drawn across the meter. An automatic bank switches steps in and out as the load varies, holding the target rather than overshooting it.
Here is what an honest supplier tells you and a salesman does not: on a site with variable frequency drives, inverters, LED drivers or rectifiers, a plain capacitor bank can make things worse. Those loads inject harmonic currents, and capacitors can resonate with the supply impedance at a harmonic frequency. The result is amplified current, overheated capacitors, blown fuses and sometimes damaged equipment.
The answer is not to avoid correction. It is to measure the harmonic content first, and where it is significant, fit a detuned bank with reactors that shift the resonance away from the harmonics present. That costs more than a plain bank. It also works.
- Measure before you quote. Load pattern and harmonics, over days and not minutes.
- Size to the measured load, not to the transformer rating.
- Automatic, not fixed, where load varies — over-correction has its own penalties.
- Detuned reactors where drives are present.
- Protection and ventilation. Capacitors are heat sensitive and a factory switch room is hot.
How this sits with solar
A point worth making because it catches people out: solar reduces your kWh consumption, but it does not by itself fix your power factor, and your demand charge may barely move.
A factory that installs solar and expects the whole bill to fall proportionally is often disappointed, because the demand portion carries on. Correcting power factor and installing solar address two different lines. Do both, and understand which one each is fixing. Our guide on reading an electricity bill covers the anatomy of both lines.
Not sure what your power factor is?
It is printed on most industrial bills. Send us a photo and we will read it for you.
Power factor: questions people actually ask
What is power factor in simple terms?
Why am I being penalised for it?
How do I find out what my power factor is?
How is it corrected?
Is it worth doing?
The bottom line
Find the power factor line on your bill. If it is below 0.90, there is money on the table, and the payback on correcting it is usually measured in months rather than years. Just insist that whoever quotes you measures the harmonics first — and be suspicious of anyone who offers a price without visiting the site.
Get a power factor correction proposal based on measurement
We log your load and harmonics before quoting, size the bank to what we measured, and tell you when a detuned bank is genuinely needed — and when it is not.
