Industrial Electrics

Saving grace



Dealing with power quality problems in small and medium installations can be a source of new business for contractors. Phil Kreveld explains.

There’s money to be made by poking your nose into customers’ electrical consumption.

It’s OK to use larger energy-intensive industries as examples, but they fall outside the financial capabilities of smaller electrical contractors.

However, there’s business to be had from the more modest consumers of electricity.

Don’t be surprised if you get a cool reception at first, because many people think there isn’t much that can be done to save on electricity.

When you next walk in to your supermarket, big or small, think about the following:

  • Annual electrical consumption can be as high as 500MWhr for a 1000m2 Scale that down by floor area for your local store and you still have a good potential prospect.
  • Grocery retailing energy costs can be as high as 1% of sales. In case that sounds low, remember that profit margins are not much greater.
  • The big loads are heating, ventilation and air-conditioning, and refrigeration – representing about 70%, with lighting at 20%. There’s also loss of refrigerant, which is a big cost, and it makes equipment consume more energy.

Your local fast food outlet might well be able to save 10-20% of its energy bill, and the usage might be 50-100MWh a year.

Regional hospitals typically consume more than 100kWhr per square metre each year, and their tight budgets make saving energy an important issue.

There are also energy savings in agricultural and regional centre businesses as shown below.


Electricity costs as a percentage of operating expenses

Dairy                                          4%

Beef/sheep, broad acres          2%

Vegetable crops                       3%

Broilers                                    15%

Supermarkets                          15%

Fast food                                   5%


In general, substantial savings are likely to be found in kVA demand reduction as well as in kilowatt/hour reduction. Have a look at a sample calculation set out further down.


What’s been happening

In the national electrical supply sector we are flat-lining in terms of terawatt/hours (equal to 1012 watt/hours).

This wasn’t caused by Labor’s carbon tax, as it barely got up anyway. Rather, it is the closing down of some major industries, with more closures on the way.

Energy demand is not the reason for rising electricity prices – it’s peak demand.

Peak demand occurring for short times will strain transmission and distribution systems, requiring greater capital expenditure and prompting tariff increases. The accompanying graph shows what’s been happening to energy demand in peak gigawatts over the past 17 years.

However, real demand is measured in kVA, MVA or, in the case of the graph, in GVA to keep things on the same scale. That measure is determined by power factor. There is every reason to think that the power factor issue is not going away, and this is why:

  • growth in HVAC; and
  • growth in ‘electronic’ loads including lighting.



They add to the old-fashioned notion of power factor.

They also add to the bill, as electricity prices now include a kVA demand charge. The poorer the power factor is, the more you get slugged, because everything that depends on good voltage regulation in the transmission/distribution system depends on flattening that demand.


Electricity meters

Material published by the distribution sector, and companies selling power factor correction gear, includes images of beers and coffees topped with foam.

The slogan is ‘You also have to pay for the foam.’

Then there’s the right-angle triangle explanation for the more technical reader. The triangle is the graphical explanation that:

kW² + kVAr² = kVA²

There’s a sharp definition of what a kilowatt is – you heat water with it – and torque multiplied by revs for mechanical loads driven by motors.

There is no immediately sharp definition for the other terms. That’s because of the prevalence of electronic loads including HVAC, and the increase here and there due to wind farms and solar farms with increasing capacities being connected to distribution networks.

The kVA measure depends not only on the meter but also on the quality of power being delivered.

Installations can’t be allowed to spew out more than a certain level of harmonics or there’s trouble with the distribution company. That’s why so many installations now feature harmonic filters.

Then there’s power factor. Capacitor banks or active filters, or a combination of the two will improve the power factor – you hope. It may well, but not necessarily as much as ‘calculated’ from the right angle triangle theory.

It’s how kVA is measured that influences the demand charges. To put it succinctly: irrespective of the metrology employed in the electricity meter, kVA represents your current (including your harmonics) multiplied by the power supply’s voltage (including its harmonics).

The basic metrology for kVA is the summing of small time-slice, synchronously sampled voltage by current multiplications.

The more distortion by way of voltage harmonics there is in the supply voltage, the more the kVA becomes.

If you would like to know the nitty gritty, there are publications explaining the IEEE 1549-2010 methods on how to measure kVA.

However, it’s doubtful that a local poles and wires outfit will be able to answer the kVA theory of measurement question. Furthermore, after December 2017 it won’t be their business to automatically supply the electricity meters. That will be the business of meter co-ordinators (MCs), a separate type of company created by the Federal Government’s Power of Choice program.

In short, the kVA portion of the bill is determined by a less than precise kVA computation (certainly on the part of the consumer) and a precisely known tariff.


Can we forget kVAr?

The ‘froth’ factor or real power factor is simply kW divided by kVA.

But we can’t forget the kVArs. There’s the kVAr which, when too high, causes network instability. This is the ‘displacement’ kVAr, responsible for the displacement power factor.

Distribution companies want customers to keep to acceptable limits. It’s part of the kVA, but only a part, as explained above.

What sort of effect from harmonic distortion can you expect on kVA demand? It’s not necessarily dramatic, but it can tip you over the edge if there’s a maximum kVA beyond which a punitive rate applies.

Additions to kVA can be major if there is substantial voltage distortion. That is something you should test thoroughly. The procedure can be trying. You need to switch off loads likely to influence the voltage distortion then check voltage distortion at the switchboard. For a new installation it’s easy – do the test, then connect.

And before we let the topic go, there can be ‘issues’ with kVArs. Electronic/smart meters have several ways of measuring this, giving a different power factor to the one you would calculate from the right-angle triangle.


The economics

By way of example, we will concentrate on smaller installations, say from 100A upwards.

These often have no restriction on power factor, unlike so-called contestable installations in which it must be more than 0.9.

Let’s look at a 415V, 150A installation with a power factor of 0.8 and a power demand of 65kW.

Depending on the load diversity factor, annual energy consumption is 200MWhr. This type of installation will attract a kVA charge, typically about $15 per kVA per month. Based on the power factor of 0.8, the measure is 81.3kVA, or about $14,600 a year in demand charges.

With the power factor increased to 0.95, the measure would be 68.4kVA and annual savings on the demand tariff would be about $2300.

The figures with a power factor varying between 0.6 and 0.8 based on the same usable power as above (65kW) give an average of 92.9 kVA. The savings from improving the power factor to 0.95 are about $4400.

The economics depend on a detailed knowledge of tariffs, and we won’t identify individual distributors.

However, the tariffs are public documents and easily accessible, although not necessarily easy to interpret. Nevertheless it will pay off to study them closely then go prospecting among larger consumers, possibly bearing a soft copy of your services.


Regional distribution

Problems do occur with voltage regulation, in particular on SWER lines.

Consumers connected to the SWER distribution network can encounter nasty problems with motors stalling because of low voltage, and solar inverters cutting out because of low or high voltage thresholds being exceeded.

Larger consumers, dairies for example, will have standby diesel generators. Doing a power quality test for these installations is more than just a good idea.

Without solid data on the level of voltage regulation and harmonics, harmonic resonance of the converter of a VSD with local capacitor power factor correction on the SWER line can end up damaging customer equipment and cause metering problems.

SWER distribution has great construction cost advantages but can be tough on power quality.


Analyse first

Power quality problems can disadvantage consumers due to higher bills and can drive up maintenance costs.

Contractors can render a valuable service by providing power quality surveys. These should always be done when considering capacitor bank power factor correction, and also if harmonic mitigation is planned.

Furthermore, the gathering of power quality data is important when disputes arise with distributors. Many companies offer power quality analysers, and some have rental options.



The distribution sector is generally privatised, but it is highly regulated and tariffs go up in accordance with capital expenditure approvals by the Australian Energy Regulator.

To a large extent the joy of electricity cost reduction is found in technical solutions. The largest individual consumers have been aware of this for a long time and have adopted sophisticated demand response strategies.

The bulk of commercial and industrial consumers are wide open to your assistance as a qualified electrical contractor.

About Phil Kreveld

Phil Kreveld

Phil Kreveld is an electrical engineer with broad experience in electrical and electronic instrumentation, including relay testing power and power quality analysis.

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