Electrical consumers on alternating current require more power than they convert into active power (i.e. power that can be used efficiently). Induction motors, for example, convert a maximum of 80 to 90% of the total power supplied into active energy. The remaining power (reactive power) is used to create a magnetic field in the motor. The ratio between the active power and the reactive power is expressed in cos phi (the power factor).
If the reactive power is too high (and therefore the cos phi is too low), this results in significant heat losses and reduced efficiency and too little of the total power supplied is converted into usable power.
System operators fine end users when the ratio between the active power and the reactive power (cos phi) they take from their distribution systems is too low. This is because when the cos phi is too low, the current through the cables increases, heat losses rise and the switchgear becomes overloaded. The fines are charged via your energy supplier and can be high. You can avoid these fines by installing a capacitor bank to offset the excess reactive energy.
Your consumption invoice will tell you your cos phi value and whether or not you are being fined by the system operator.
Your account manager can help you to avoid this fine.
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