In most industrial and commercial setups, electricity charges are determined by several factors:
The most straightforward metric is kWh (kilowatt-hour), representing the energy consumed, which is charged at a rate per kWh.
Additionally, the supply authority sets an "Agreed Supply Capacity" measured in kVA (kilovolt-ampere), which is billed monthly at a fixed rate per kVA, regardless of actual consumption. Any excess usage beyond this agreed capacity is typically charged at the same rate.
Another factor is kvarh (kilovar-hour), which is monitored and charged based on excess reactive power consumption using a specific formula.
There are opportunities to reduce these charges by optimising the supply characteristics. This can be done by lowering the Agreed Supply Capacity and improving the Power Factor, which reduces kvarh consumption. Often, improving one of these parameters positively impacts the other, as enhancing the Power Factor also decreases kVA usage.
By reducing the Agreed Supply Capacity, consumers can lower their monthly kVA charges. Additionally, cutting down on kvarh consumption can further contribute to cost savings.
One common method to achieve these improvements is through the installation of Power Factor Correction (PFC) equipment. These systems use capacitors to automatically adjust the power factor as close to unity as possible, counteracting the effects of inductive loads that cause poor power factor.
Looking ahead, significant changes to electricity charging methods are expected in the near future. Notably, the penalties for exceeding the Agreed Supply Capacity will increase. This aims to discourage consumers from deliberately setting a lower capacity in hopes of only facing minimal penalties when overstepping. The higher tariffs for excess capacity will also enhance the return on investment for Power Factor Correction equipment, making it a more appealing solution for those aiming to cut energy costs.
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