Power factor correction is the installation of equipment, usually capacitor banks, that supplies the reactive power your motors and transformers need locally, so the grid, your transformer and your generators carry less current for the same useful work. For a Nigerian factory, hospital or commercial building this does four things: it frees transformer and generator capacity you have already paid for, cuts the heat losses in your cables, steadies voltage at the far end of your network, and reduces any kVA-based or reactive charges on your electricity bill. This guide explains what power factor is, how to find out whether yours is costing you money, how to size a correction system with a worked example, and how to avoid the harmonics and generator problems that make badly designed capacitor banks fail.
What's in this guide
- What is power factor, in plain terms?
- How does poor power factor cost a Nigerian business money?
- How do you measure your power factor?
- How do you size a capacitor bank?
- Which type of correction do you need?
- What about generators and power factor?
- How do you keep a correction system working?
The numbers at a glance
| Item | Before correction | After correction | Basis |
|---|---|---|---|
| Real load | 800kW | 800kW | Worked example |
| Power factor | 0.75 | 0.95 | Worked example |
| Apparent power | 1,067kVA | 842kVA | kW ÷ PF |
| Current at 415V | ~1,484A | ~1,172A | kVA ÷ (√3 × 415V) |
| Capacitor rating needed | — | ~443kVAr | kW × (tan φ1 − tan φ2) |
| Cable I²R losses | 100% | ~62% | Current ratio squared |
| Capacity freed | — | ~225kVA | Difference in kVA |
| Typical generator rating basis | 0.8 PF | — | Industry rating convention |
What is power factor, in plain terms?
Power factor is the ratio of real power (kW), which does useful work, to apparent power (kVA), which is what your cables, transformers and generators must actually carry. A power factor of 1.0 means every kVA does useful work. A power factor of 0.75 means you carry 1.33kVA for every kW you use.
Where does the difference come from?
Motors, transformers, welding sets and older lighting ballasts need reactive power (kVAr) to build the magnetic fields they run on. Reactive power flows back and forth between the source and the load without doing useful work, but it still flows through every cable and winding in between, and it still produces current and heat.
The power triangle
- Real power (kW) is the horizontal side.
- Reactive power (kVAr) is the vertical side.
- Apparent power (kVA) is the hypotenuse.
Power factor is the cosine of the angle between kW and kVA. Correction shortens the vertical side by supplying kVAr locally from capacitors, which shortens the hypotenuse and brings kVA closer to kW.
Which loads are the usual culprits?
Lightly loaded induction motors are the biggest. A motor running at a fraction of its rating draws nearly the same magnetising current as at full load, so its power factor falls sharply. Factories with oversized pumps, fans and compressors running at part load often have poor power factor for this reason. Transformers energised with little load, arc welders and induction furnaces add to it.
How does poor power factor cost a Nigerian business money?
Poor power factor costs money in four ways: capacity you cannot use, losses you pay for, voltage problems that damage equipment, and, depending on your tariff, charges on your bill.
1. Capacity you have paid for but cannot use
Transformers and generators are limited by current, which means by kVA. A 1,000kVA transformer supplying load at 0.75 power factor delivers only 750kW before it is full. Correct to 0.95 and the same transformer can deliver 950kW. For a factory planning an expansion, correction is often cheaper than a new transformer or an extra generator.
2. Losses in your own cables and transformers
Heat losses in conductors rise with the square of current. Cutting current by 21 percent, as in our worked example, cuts I²R losses by about 38 percent. Those losses are energy you paid for, whether from the DisCo at Band A rates of ₦209.5/kWh (Opaindex) or from diesel at around ₦630/kWh in fuel alone (₦2,100 per litre at an assumed 0.3 litres per kWh; diesel price from The Frontier).
3. Voltage drop at the far end
Reactive current causes voltage drop along cables. On long runs to remote buildings, pump houses or production lines, low voltage makes motors run hotter and draw more current, shortening their life. Correction near the load improves voltage where it matters.
4. What your bill may charge
Nigerian DisCos distinguish Maximum Demand (MD) customers, the larger commercial and industrial accounts, from non-MD customers. NERC's 2026 Band A compensation order, for example, treats MD and non-MD customers differently (EBC Financial Group). Check your own bill:
- If it shows kVA maximum demand or a demand charge, correction reduces that line directly.
- If it shows reactive energy (kVArh) or a power factor penalty, correction reduces or removes it.
- If it bills kWh only, the savings come from capacity, losses and generator performance rather than a tariff line.
We deliberately do not promise a tariff saving without seeing your bill, because billing treatment differs between DisCos and customer classes.
How do you measure your power factor?
Measure it with a power quality logger at your main incoming supply for at least one to two weeks, covering both production and quiet periods. A single spot reading is not enough.
What the logger should record
- kW, kVA and kVAr on each phase, at intervals of one to fifteen minutes.
- Power factor on each phase and in total.
- Voltage on each phase, including dips.
- Current and voltage harmonics (THD), up to at least the 25th harmonic.
- Maximum demand in kVA and when it occurs.
What your bill and meters can tell you
MD customers' bills often show maximum demand. Many modern multifunction meters on main switchboards display power factor directly. Generator controllers display kW, kVA and power factor for each set. Compare these readings with the logger results.
Why harmonics must be measured before you buy capacitors
Variable speed drives, UPS systems, LED drivers, inverters and computers draw non-sinusoidal current, which creates harmonics. Capacitors interact with harmonics. A capacitor bank installed on a network with significant harmonics can resonate, overheat and fail within months, or amplify harmonics that damage other equipment. The logger data decides whether you need standard capacitors or detuned banks and filters.
How do you size a capacitor bank?
You size it from the real load and the power factor you want to reach, using the formula:
Required kVAr = kW × (tan φ₁ − tan φ₂)
where φ₁ is the angle at the present power factor and φ₂ the angle at the target.
Worked example
A factory's logged data shows an average peak of 800kW at 0.75 power factor, supplied at 415V. The target is 0.95.
- tan φ₁ at 0.75 PF = 0.882
- tan φ₂ at 0.95 PF = 0.329
- Required kVAr = 800 × (0.882 − 0.329) = 800 × 0.553 ≈ 443kVAr
What the example achieves
- Apparent power falls from 800 ÷ 0.75 = 1,067kVA to 800 ÷ 0.95 = 842kVA, freeing about 225kVA.
- Current at 415V falls from about 1,484A to about 1,172A (kVA × 1,000 ÷ (√3 × 415)).
- Losses in cables and transformer windings fall to about (1,172 ÷ 1,484)² ≈ 62 percent of their previous level.
Why target 0.95 and not 1.0?
The last few points of correction need disproportionately large capacitors and increase the risk of leading power factor at light load. Most industrial designs target 0.95–0.98.
Why an automatic bank rather than a fixed one?
Factory load changes through the day. A fixed bank sized for peak load over-corrects at night, pushing the power factor leading. An automatic power factor correction (APFC) panel switches capacitor steps in and out to track the load.
Which type of correction do you need?
The right type depends on your load pattern and harmonic levels. The survey data decides.
Fixed capacitors at individual motors
For large motors that run continuously at steady load, a capacitor connected at the motor terminals corrects at the source and relieves the cable feeding it. It must be sized below the motor's no-load magnetising current, to avoid self-excitation when the motor is switched off.
Automatic power factor correction (APFC) panels
A central APFC panel at the main switchboard, with a controller and several contactor- or thyristor-switched steps, suits most factories and commercial buildings. Thyristor switching suits rapidly changing loads such as welding lines and cranes.
Detuned capacitor banks
Where harmonic distortion is significant, each capacitor step is paired with a series reactor that tunes the combination below the dominant harmonic frequencies, preventing resonance. The detuning percentage is selected from the harmonic survey.
Active harmonic filters
On networks dominated by drives, UPS systems and inverters, an active filter injects current that cancels harmonics and can also correct power factor. It costs more than capacitors, but solves problems capacitors cannot.
Correction at transformer secondaries on campuses
On estates and campuses with several substations, correction at each substation's low-voltage board relieves both the transformer and the medium-voltage network. Our work on transformer and RMU installations and on campus networks routinely includes power quality design at each substation.
What about generators and power factor?
Generators need special care, because a generator behaves differently from the grid when power factor goes leading.
Generators are rated at 0.8 power factor
Most industrial generator sets are rated in kVA at 0.8 power factor. A 1,000kVA set is designed to deliver 800kW. If your load runs at 0.7, the alternator reaches its current limit at 700kW, while the engine could still deliver more. Correction lets you use the full engine rating, which can mean running one set fewer.
Why fewer sets online saves fuel
Engines burn more fuel per kWh at low load. If correction lets you carry the same load on two well-loaded sets instead of three lightly loaded ones, each running set operates nearer its efficient point. This is a real fuel saving on generator-heavy sites, over and above the loss reduction.
The leading power factor risk
A capacitor bank sized for a large factory load, left connected when a single small generator carries a light night load, can push the power factor leading. Many alternators cannot control voltage well at leading power factor, and the result can be over-voltage, instability or tripping. The APFC controller must be set, or interlocked, to limit correction when running on generators. Specify this at design stage.
Changeover transients
Frequent changeover between grid and generator, a daily reality for Nigerian sites, exposes capacitor banks to switching surges. Use capacitors and contactors rated for capacitor duty, with discharge resistors and adequate time delays before reconnection.
Engineer connecting a power quality analyser to a main switchboard
How do you keep a correction system working?
Maintain it on a schedule, because capacitors lose capacity with age and heat, and a failed step is invisible until the bill or the transformer temperature tells you.
A simple maintenance routine
- Monthly: check the APFC controller shows the target power factor and that all steps switch.
- Quarterly: thermal imaging of capacitors, contactors, reactors and busbars.
- Annually: measure the capacitance of each step against its rating, check discharge resistors and fuses, clean and re-torque connections, and review harmonic levels.
- After any major load change: re-survey, because new drives or large motors change both power factor and harmonics.
Signs something is wrong
Power factor drifting down month on month, capacitor cans bulging or leaking, contactors chattering, fuses repeatedly blowing, or panel temperatures rising.
Where power factor fits in a wider efficiency plan
Power factor correction is one of the fastest-payback measures in an energy audit, but it is one line in the plan, not the whole plan. Combine it with motor right-sizing, variable speed drives where load varies, lighting upgrades and generator load management. Lobcom's energy audits and power quality services cover the full picture.
Gotchas
Installing capacitors without a harmonic survey
Resonance with harmonics can destroy capacitor banks and damage other equipment. Survey first.
Fixed banks on variable loads
Over-correction at light load pushes power factor leading. Use automatic switching.
Leading power factor on generators
Limit or interlock correction when on generator supply, especially at light load.
Promising tariff savings without reading the bill
Billing treatment differs by DisCo and customer class. Capacity and loss savings are certain; tariff savings depend on your bill.
Forgetting maintenance
Capacitors lose capacity over time. An unmaintained bank quietly stops working.
Key takeaways
- Power factor is the ratio of useful kW to the kVA your equipment must carry; poor power factor wastes capacity and increases losses.
- Correcting 800kW from 0.75 to 0.95 frees about 225kVA and cuts cable losses by roughly 38 percent.
- Size correction from logged data using kVAr = kW × (tan φ₁ − tan φ₂), and target 0.95–0.98.
- Measure harmonics before buying capacitors; detuned banks or active filters are needed where drives and UPS systems dominate.
- On generator-powered sites, correction lets you run fewer, better-loaded sets, but must be limited to avoid leading power factor.
Frequently asked questions
What is a good power factor for a factory? 0.95 or above is a common target. Below about 0.85, most sites have capacity and loss savings worth pursuing.
Will power factor correction reduce my electricity bill? It reduces losses and any kVA-demand or reactive charges on your bill. If your DisCo bills kWh only, the main savings come from freed capacity, lower losses and better generator loading.
How long does a capacitor bank last? It depends on temperature, harmonics and switching duty. Annual capacitance testing tells you when steps need replacing.
Can power factor correction damage my generator? Only if it over-corrects to a leading power factor at light load. Correct design limits correction on generator supply.
Do LED lights and inverters improve power factor? Not necessarily. Many electronic loads have good displacement power factor but introduce harmonics, which need their own treatment.
Related reading
- Gas vs Diesel Generators: A Total Cost of Ownership Model for Nigerian Factories
- Smart Metering for Estates and Universities
- How to Build an Independent Power Project (IPP) in Nigeria
Want to know what your power factor is costing you? Lobcom logs your supply for two weeks, measures power factor and harmonics, and designs, installs and maintains the right correction system. Book a power quality survey.
Sources
- Opaindex: Band A tariff
- The Frontier: Diesel crosses ₦2,000/litre
- EBC Financial Group: Band A credits and net billing (MD and non-MD treatment)
- Engineering calculations in this article use standard power triangle relationships; inputs are labelled as worked-example assumptions.
