Power factor correction kvar policy in countries

I want to share with you information about regulations and policies in different countries about power factor correction: are penalty levels specified, which levels ?

world kvar penalties

world kvar penalties : Germany, Austria, Canada, Spain, France, Portugal, … ?

Most of people know the main benefits of power factor correction
  • Increase the power availability or reduce the size of the electrical installation,
  • reduce losses and as a consequence contribute to the reduction of CO2 emissions,
  • make saving on energy bill when penalties are applied.

From my point of view, charge the reactive power in the electricity billing is the best way to push power factor correction, because it gives a fast return on investment.
I found information regarding the reactive power billing policy in some 16 countries:
Germany, Austria, Canada, Spain, France, Portugal, Baltics, Roumania, Russia, UK, USA, Thailand, China, Australia

you can have a look to this xls file and you can complete it  for the countries you know by writing a Comment below … and i will then come back with an updated table

And I’m really surprised how huge is the difference between the countries and between the utilities in some countries.

Working at Schneider-Electric, i can also advise you to use the technical information given in the Electrical Installation Guide, chapter L : a good overview about power quality & power factor correction
example of topics covered :

  • Why to improve the power factor?
  • How to improve the power factor?
  • How to decide the optimum level of compensation?
  • Example of an installation before and after power factor correction

Jacques Peronnet


  • In countries like India, where there are no charges for reactive power at consumer level, I think utilities should install those meters than can measure reactive power also. Only then consumers will try to improve the power factor of their loads.

  • In ISRAEL there is a penalty for under 0.92 for low voltage consumers and under 0.90 for hi-voltage consumers. It is checked monthly and the penalty is 0.1% (of the electric bill) for every 0.001 deviation.

  • I am an Electrical Engineer in the USA and I don’t understand your Comments.

    1) Electrical rates in the USA do not vary by State, they vary by a) Power company, b) and the type of consumer – for example, residential, industrial or commercial, and even within these there are several types of rates. One power company may supply power to several States or there may be several power companies in one State. Furthermore, rates often vary by the amount of power consumed, the time of day and often the season. Only very rarely are poor power factor penalties charged to residential users. Lastly, electric rates are not set by the States but by the power companies under the oversight and approval of the responsible Public Service Commission.

    2) What do you mean with your $3 per KVAR comment? Actually, the most common way that power companies impose the power factor penalty is by charging for KVA-HRs used rather than KW-Hrs.

  • Why do You think that Russia don’t have a penalty? They have. I live in Ukraine and we also have a penalty. I don’t know what is the price of reactiv power in our country, but now almost every new building with power over 50kWatt has а reactive power compensation. cos phi have to be near 0.95.

    Sorry for my bad english.

    • No, they dont have any penalty, because they are the energy giant of the world.They do not need to control their energy consumption.It seems inefficient for world but they do not care it.

  • I didn’t understand the concluding part of your article, could you please explain it more?

  • I’m looking forward to getting more information about this topic, don’t worry about negative opinions.

  • in Mexico there is a penalty if you are under 90% of power factor, but also there olso a bonus if you are above only for industrial loads, they use this 2 formulas: total_energy_bill_PF_carge_%= (3/5)*((90/PF)-1)*100, total_energy_bill_PF_bonous_%= (1/4)*(1-(90/PF))*100

  • power factor improvement is done to reduce losses upstream. What if the compensating equipment consumes many times more energy than it saves upstream? Are there standards fixing the wattloss/kvar of compensating equipment?

  • Great information!

    I am Electrical Engineer and will inform soon as occurs in Brazil demand reactive

  • in our country, the cos phi level is 0.98 so its almost impossible to compensation with only using 3-p capacitors, you should use also 1-p capacitors. as you may know, electric energy is getting expensive year an year and most of utulities are going to level up cos phi level their countries. so why? because reactive energy is waste as for us.
    also this information is very good, thanks a lot.

  • By the rules in Brazil, users supplied at voltages greater that 2.3 kV (group A) must have their PF verified by the utility in a mandatory and permanent way (art. 34, reg. 456/00). Users supplied at voltage lower than 2,3 kV (group B) can measure their PF in a facultative way. If that PF is lower than 0.92 (inductive or capacitive), reactive energy consumption and demand are mesure and charges apply (Art. 49, reg. 456/00). Furthermore, according to art. 68, reg. 456, users from group B can be charged by their reactive energy and demand, if their PF is lower than 0,92 during a minimum period of 7 days. From my point of view, if utilities adopt electronic meters to also register the PF of residential users, there are no regulation that don’t allow them to charge us by the reactive energy. So, the end is near… Are you agree?

  • Nice share…
    I just know that Power Factor Correction policy in some countries much higher than in Indonesia.
    Very good for optimization of generator utilization..

  • I am from Romania. I am not aware of penalties applied at least to home consumers. I have no connections to industrial world, so i don’t know what’s up there.
    It would be usefull to know the source of this informations.

  • Thanks for this information. We work with electric utilities, major corporations, government agencies, and equipment manufacturers around the world. PF correction is a topic of rising interest, so thanks for providing this helpful information

  • hi,

    1.u should disconnect capacitors b4 starting genset.
    capacitor acts as load on generator.

    2. there are various types of capacitors like MPP, Gas filled etc. depending on the working of motor one can suggest u the exact capacitors.

    if u need mail me on powercop.auditors@gmail.com

  • This is quite enlightening. I didn’t know that some countries impose a certain penalty when you consume too much energy.

  • Hi,

    Are you working for or own the company called Sri Enterprises? If so, i would like clarify some details. Could you please provide your contact details?

  • Hi, I was wondering where I could find the sources for the information in the spreadsheet for the current year, 2013? Thanks!

  • Dear All

    Any body required capacitor, Capacitor bank and APFC panels and Harmonic Reactor .Please feel free to
    contact me.

    Email id:s.ram1091power@gmail.com

  • I see that your topic is of interest and most participants working in the field, meeting in reality phenomenon. As a novelty for Romania, inductive reactive energy, a Power Factor
    less than 0.92 or 0.65, are billed hourly rates established by National Regulatory Authority in Energy, geographically and voltage levels of the National Energy System,
    for example, an average price of 1.4 Euro / MVArh for PF (hourly) of less than 0.92 and 3 * 1.4 Euro / MVArh. The rule applies only to electricity consumers endowed equipped with intelligent metering systems dispatchable without compensation decisions PF consumer costs increase efficiency and lower energy consumption. Such end users are obliged to invest in efficiency projects consumption, investments quickly recover and make a safe return after recovery.

  • We have a solution thats better than regular capacitor bank, ,KVAR products is build to reduce kw,amp and optimize PF at the load in the right amount. for more information please feel free to contact me over Skype or in my email..

    SKYPE ID: johnfouere
    email: jf@kvar.cl

  • Can I know country like Vietnam and Indonesia, is there a charge by utility company? Thanks for advice

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