How do power factor penalties and rebates work on Indian electricity bills?

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Senseible · Accepted Answer

On kWh-billed tariffs, your state commission sets a power factor band: below a floor, often 0.90, the discom adds a surcharge, and above a higher mark, often 0.95, some states give a rebate. On kVAh-billed tariffs there is usually no separate charge, because a low power factor already raises the billed units. Power factor is real power divided by apparent power: kW / kVA, or kWh / kVAh over a billing period. Motors, transformers and welding sets draw reactive power, which loads the discom's lines without doing useful work. A power factor of 0.80 means the network carries 1.25 kVA for every kW you use. Each State Electricity Regulatory Commission fixes the bands, the percentage per step and which consumer categories they apply to in its tariff order. There is no single national slab. A typical structure charges a percentage of the energy bill for each 0.01 the average power factor falls below the floor, and gives a smaller percentage rebate for each 0.01 above an upper mark. Some orders treat a leading power factor (over-compensation with too many capacitors) as if it were lagging, so more capacitors are not always better. Where demand is billed in kVA, a low power factor also raises the demand charge, since the same kW needs more kVA. Several states now bill industrial consumers in kVAh. Since kVAh = kWh / power factor, a poor power factor raises the units you pay for, which works as a built-in penalty, and unity power factor gives the lowest bill. Many such tariff orders drop the separate surcharge and rebate. Check your own order: the rate per kVAh and any leftover incentive differ by state. The capacitor rating needed is kVAr = kW x (tan phi1 minus tan phi2), where phi1 is the angle at the present power factor and phi2 at the target. BEE's guide book on energy efficiency in electrical utilities explains placement: correction at large motors cuts losses inside the plant as well as the bill, while a single bank at the main incomer only fixes the bill. Very little. Scope 2 is based on kWh, the real energy used, and that does not change when you add capacitors. You may save a small amount of kWh from lower cable and transformer losses inside the plant. The bill can fall sharply, but the location-based emission figure stays almost the same.

How do power factor penalties and rebates work on Indian electricity bills?

What power factor measures

How the surcharge and rebate are set

Why kVAh billing changes the picture

Sizing capacitors to fix it

Does a better power factor cut your emissions?

Worked example: 500 kW load, power factor 0.80 to 0.95

What Senseible does here