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What Reactive Power Is
Here’s the simplest way to think about it: imagine you’re in a pub ordering a pint. You get the beer (that’s your real power—the stuff that actually does useful work), but you also get foam at the top (that’s reactive power). The foam looks like beer, feels like beer, but you can’t drink it. You’re still paying for your pint, but a chunk of what you’ve ordered isn’t delivering value.
In electrical terms, active power (measured in kilowatts, kW) is the actual energy your equipment uses to get work done—running motors, lighting bulbs, heating systems. Reactive power (measured in kilovars, kVAr) doesn’t do any work. It’s energy that bounces back and forth in your electrical system, created by the way certain equipment operates.
This reactive energy still has to flow through your wiring, your meters, and your supplier’s infrastructure. That’s why it costs money. Your equipment is creating extra demand on the network for something that doesn’t produce any useful output.
Power Factor Explained
Power factor is the ratio between real power and reactive power. It’s expressed as a number between 0 and 1 (or as a percentage).
A power factor of 1.0 (or 100%) is perfect—all the energy you’re drawing is active power, doing real work. A power factor of 0.9 means 10% of your energy is reactive. A power factor of 0.8 means 20%.
In the UK, most suppliers won’t charge you for reactive power if your power factor stays above 0.95 (or sometimes 0.90, depending on your contract). Drop below that threshold, and you’ll start seeing charges appear on your bill.
A good power factor is 0.95 or higher, which means minimal to no charges. A fair power factor ranges from 0.85–0.94, where charges are likely to appear. A poor power factor is below 0.85, which results in significant charges on your bill.
What Causes Poor Power Factor
Power factor problems aren’t a sign something’s broken. They’re a natural consequence of how certain equipment operates.
Motors are the biggest culprit. Electric motors (in fans, compressors, pumps, machinery) need what’s called “magnetizing current” to create the magnetic field that makes them spin. This current is reactive power. The larger your motors, the more reactive power they produce.
Transformers work the same way—they use reactive power to energize their cores. If you’ve got your own on-site transformer, that’s contributing to the problem.
Fluorescent and discharge lighting (older light fittings, especially older sodium vapour or mercury lights if you’ve still got them) are highly reactive. LED lighting is much better in this respect.
Air conditioning systems produce reactive power, particularly when they’re running hard.
Welding equipment and other industrial processes also generate reactive power.
If your business runs 24/7 with motors constantly spinning, or if you’ve got a lot of older lighting and heating equipment, your power factor is probably already heading south.
How Reactive Power Charges Work
Here’s how these charges actually appear on your bill:
Your half-hourly meter records both your active power (kWh) and your reactive power (kVArh) every 30 minutes. Your supplier’s billing system calculates the average power factor across the month.
If your power factor drops below the threshold (usually 0.95), they calculate a charge based on how much reactive power you’ve used, a rate per kVAr (typically pence per kVAr), and how far below 0.95 your power factor is. This is usually broken out as a separate line item on your bill labeled something like “reactive power charge” or “power factor penalty.”
For a small business with a borderline power factor, these charges might be £50–100 per month. For manufacturing sites or facilities running heavy equipment constantly, they can easily exceed £500 per month. That’s real money—£6,000+ annually that you could be avoiding.
The charges exist because poor power factor increases losses across the network and forces suppliers to invest in reactive power equipment. You’re essentially paying for the consequences of your electrical inefficiency.
How to Fix It
Fortunately, this isn’t a mystery problem. Power factor correction is straightforward.
The simplest approach is installing a power factor correction unit (also called a capacitor bank). These are boxes that get installed at your main distribution board or alongside your main motor. They inject reactive power into your system in a controlled way, which cancels out the reactive power your equipment is producing.
It sounds counterintuitive—fixing reactive power by adding more reactive power—but capacitive reactive power and inductive reactive power are opposite. They neutralize each other.
These units are typically relatively inexpensive (£500–3,000 depending on size), quick to install (usually half a day), automatic (they adjust in real-time as your load changes), and reliable (20+ year lifespan).
Cost-benefit analysis: If you’re being charged £300–400 per month in reactive power charges, a £1,500 unit pays for itself in 4–5 months, then saves you thousands annually. The math works even for smaller corrections.
Who should do this: A qualified electrician or specialist in power factor correction. This isn’t DIY. You’ll need sign-off from a Part P registered electrician in most cases.
Other approaches include switching old equipment—replacing fluorescent lighting with LED and upgrading old motors to high-efficiency models. You can also reduce idle equipment by not leaving motors running when they’re not needed, or stagger loads if you have multiple large loads by running them at slightly different times to spread out peak reactive power demand.
For most businesses, though, a capacitor bank is the most cost-effective solution.
Key Takeaways
✓ Reactive power is energy that flows through your system without doing useful work—it’s like the foam on top of a pint.
✓ Power factor measures the ratio of real to reactive power; anything below 0.95 typically triggers charges.
✓ Motors, transformers, fluorescent lighting, and air conditioning are your main culprits.
✓ Poor power factor costs money in direct charges on your bill.
✓ Power factor correction units typically cost £500–3,000 and pay for themselves within months if you’re paying significant charges.
The best next step? Check your bill for reactive power charges. If you’re being charged, get a power factor assessment done. A one-hour site visit from a specialist costs £200–300 and will tell you exactly what you’re dealing with and whether correction is worth your while.
Reactive power charges are just one component of your electricity costs. Other network-related charges include DUoS (distribution) charges and standing charges, both of which vary depending on your meter type and consumption patterns.
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