Reactive power: A simplified model to justify the cost of interventions

The electricity accounts of major electricity users include various cost components other than the unit cost of electricity. These added costs can be subdivided into reactive power charges and network charges. Typical mining groups and other large industries usually operate substantial inductive loads such as induction furnaces, induction motors and large transformers. These inductive loads all add up to increase the reactive power. This increases the reactive power- and network charges billed by the power utility, Eskom. There are many recognized ways to improve power quality. These include, amongst others, power factor correction installations. This paper investigates some of the typical interventions commercially available to correct low power factors. Because these interventions require considerable capital expenses, a financial analysis is required to explore the viability of these types of projects. A simplified financial model is presented to help make these decisions easier. This financial model includes reactive power- and network charges, as well as capital expenditure and interest. Using this model the payback period for the power factor correction installation is calculated and used to evaluate the feasibility of the installation.