There will be some energy saving that is why I said “next to no savings” rather than none but lets us keep it in perpective.
If you had a 1MW load at 0.8 power factor and install correction to 0.95.
1MW @ 0.8 = 1.25MVA
1MW @ 0.95 = 1.05MVA
If one assumes ohmic losses in the cabling system of 5% then the power saving due to current reduction would be approx (1.25-1.05)/1.25 or approx 16%
16% of 5% is approx 0.8%
On a kW tarrif your savings would be approx (0.008 x 1.25)/1 =.001 or 1% of the power bill which is purely the loss reduction saving.
If you were on a KVA tarrif the saving would be the Power factor improvement as well as the loss reduction and would exceed 16%
If you were on a kW tarrif your max demand in kW would only reduce in the order of the loss reduction but if you were on a kVA tarrif the MD kVA reduction would be significant.
Understand the tarrif.
@anilsabaji said:
No..the energy saving is by reducing the losses in the system also. However, saving from Max demand reduction may be higher than the saving by reduction in losses in case of small installations.
@Smithy said:Just a point to watch. I have seen a number of people install power factor correction equipment in the hope of making savings and see next to no saving in their electricity costs simply because they were on a kW tarrif rather than a kVA tarrif. There should be something in the calculator to alert people to thoroughtly understanding their tarrif structure.