What is power factor, in plain terms?

Real power (kW) is the electricity that does work. Apparent power (kVA) is what the meter and the network have to carry to deliver it. Power factor is kW divided by kVA, so a site drawing 400 kW while the meter reads 470 kVA is running at 0.85. The gap is reactive power, mostly from motors, compressors, refrigeration and transformers.

Does power factor correction actually reduce my bill?

Only where the tariff charges for kVA, or where the network applies a reactive charge. On a kVA-billed code, lower kVA at the same kW means a lower billed maximum, so the daily capacity charge or monthly demand charge falls. On a kW-billed tariff it saves nothing on demand.

Which NSW tariff codes bill in kVA?

Several Ausgrid large-business and high-voltage codes (EA305, EA310, EA314, EA315, EA365, EA370, EA390) and the Endeavour Energy large and high-voltage codes (N19, N29, N39) bill demand in c/kVA/day. Essential Energy prices demand in $/kVA/month on its large and high-voltage codes. The table on this page is generated from the current published price-list data, and each code links to its family guide.

Will a battery reduce the kVA charge?

Only partly, and only by accident. A battery discharges real power, so it reduces kVA by the amount the power factor allows at that moment. If the site is at 0.85 power factor, a battery sized on kW will not deliver the same reduction in kVA. Correct the reactive load first, then size storage for what is left.

How much can correction save?

It depends entirely on the kVA reduction and the published rate. On Endeavour Energy’s N19 high-season rate of 58.421 c/kVA/day, 50 kVA shaved for 31 days is about $905.53 in the network component. On Ausgrid’s EA305 rate of 57.7962 c/kVA/day held over 365 charge days, 62.4 kVA is about $13,169 a year. Capex varies with the site, the harmonic environment and the control gear, so it needs a quote and a power study.

Does solar make power factor better or worse?

Neither, on average, and it does not fix a night-time problem. A PV inverter can provide some reactive support if configured to, but it is idle after sunset — and the kVA maximum is often set in the evening. Low-load operation with inverters online can also move the site’s power factor around, which is why correction should be designed against the load profile, not the array.

Is power factor correction safe to install?

Installed and commissioned properly, yes — it is standard electrical plant. It must be designed by someone who has seen the load profile and the harmonic distortion, installed by a licensed electrician, and switched in steps so the site does not go leading at light load. Correction equipment interacting badly with harmonics is a design failure, not a product failure.

NSW commercial tariffs · power quality

Power factor correction for commercial sites

Part of your demand charge is electricity that does no work.

If the site is billed in kVA, the meter charges for apparent power — real power plus the reactive power that motors, refrigeration and compressors pull and push back. You pay for it every charge day of the year, and unlike a peak it does not disappear when the shift ends. Correcting it is usually cheaper than the storage that gets proposed instead.

How it works

Three facts explain the whole charge.

kW does the work. kVA gets billed.

Power factor is real power divided by apparent power. Motors, refrigeration, compressors, pumps, transformers and large variable-speed drives pull more apparent power than they convert into work, so the kVA number at the meter runs ahead of the kW.

It hides inside a charge you already pay.

NSW distributors price this through kVA-based demand and capacity charges rather than a separate line labelled “power factor penalty”. On a tariff that bills kVA, part of that charge is reactive power doing nothing — and it runs all year, not just at peak.

Correction changes the meter, not the work.

Capacitor banks and active filters supply reactive power at the site, so less of it is imported. The site does the same job, draws the same kW and books a lower kVA reading. Nothing about the plant improves; the measured maximum does.

A 400 kW site at 0.85 power factor draws 470.6 kVA. Corrected to 0.98 it still draws 400 kW — but only 408.2 kVA. The side that shrinks is the one a kVA tariff charges for.

kW or kVA is not a detail — it decides whether any of this saves money. Some tariffs bill real power (kW), where correction changes nothing. Most large low-voltage and high-voltage codes bill apparent power (kVA). How the demand charge itself works.

The codes that bill kVA

Where power factor shows up on a NSW bill.

Every code below carries a demand charge priced on kVA in the current published price lists. Ausgrid holds a rolling maximum on its large-business and high-voltage codes; Endeavour Energy bills the monthly peak per day; Essential Energy prices demand per kVA per month across time bands. The rates move annually — check the family guide for the charge window and the exact figures before relying on any of them.

NSW distribution tariffs with a published kVA demand or capacity charge, 2026–27 price lists
Network	Code	Basis	Published charge
Endeavour Energy	N19	c/kVA/day	High-season demand 58.421 c/kVA/day · Low-season demand 53.163 c/kVA/day
Endeavour Energy	N29	c/kVA/day	High-season demand 46.156 c/kVA/day · Low-season demand 45.54 c/kVA/day
Endeavour Energy	N39	c/kVA/day	High-season demand 41.14 c/kVA/day · Low-season demand 40.557 c/kVA/day
Endeavour Energy	N20	c/kVA/day	High-season demand 58.421 c/kVA/day · Low-season demand 53.163 c/kVA/day
Ausgrid	EA305	c/kVA/day	Peak capacity 57.7962 c/kVA/day
Ausgrid	EA314	c/kVA/day	Peak capacity 68.7649 c/kVA/day
Ausgrid	EA310	c/kVA/day	Peak capacity 59.5298 c/kVA/day
Ausgrid	EA315	c/kVA/day	Peak capacity 70.8275 c/kVA/day
Ausgrid	EA365	c/kVA/day	Peak capacity 41.1941 c/kVA/day
Ausgrid	EA370	c/kVA/day	Peak capacity 34.6232 c/kVA/day
Ausgrid	EA390	c/kVA/day	Peak capacity 9.7115 c/kVA/day
Essential Energy	BLND1AB	$/kVA/month	Peak demand $9.7035/kVA/month
Essential Energy	BLND3AO	$/kVA/month	Peak demand $12.039/kVA/month · Shoulder demand $10.8924/kVA/month · Off-peak demand $2.8541/kVA/month
Essential Energy	BLND3TO	$/kVA/month	Peak-or-shoulder demand $15.4853/kVA/month
Essential Energy	BHND3AO	$/kVA/month	Peak demand $11.5026/kVA/month · Shoulder demand $10.4071/kVA/month · Off-peak demand $3.1143/kVA/month
Essential Energy	BSSD3AO	$/kVA/month	Peak demand $4.4388/kVA/month · Shoulder demand $3.1645/kVA/month · Off-peak demand $1.2614/kVA/month
Essential Energy	BLND4SB	$/kVA/month	Peak import demand $15.4927/kVA/month · Shoulder import demand $6.8171/kVA/month · Off-peak import demand $4.9726/kVA/month
Essential Energy	BLND4LS	$/kVA/month	Peak import demand $15.1181/kVA/month · Shoulder import demand $13.2946/kVA/month · Off-peak import demand $4.4127/kVA/month
Essential Energy	BHND4LS	$/kVA/month	Peak import demand $12.5825/kVA/month · Shoulder import demand $11.2496/kVA/month · Off-peak import demand $3.8099/kVA/month

Codes not listed either bill kW or carry no demand component. If your bill shows a code that is not here, the distributor tariff guides decode it — and the basis is worth confirming before anyone quotes correction equipment.

The arithmetic

What correction is worth, on a published rate.

Worked example · network component only

Ausgrid EA305, 2026–27 rates

EA305 bills capacity on the highest qualifying kVA interval, held as a rolling maximum and charged for 365 days. Published peak capacity rate: 57.7962 c/kVA/day (ex GST).

400 kW ÷ 0.85 = 470.6 kVA · 400 kW ÷ 0.98 = 408.2 kVA · saving 62.4 kVA

Held for a full year at the published rate, 62.4 kVA is $13,168.93 a year in capacity alone — from about 248 kVAR of reactive load reduced to 81 kVAR. No generation, no storage, no change to how the site operates.

Network rates are not quotes, and this is the network component only — the retailer’s pass-through decides what reaches your bill. Correcting reactive power assumes the qualifying maximum is set by kVA rather than real load, and that the equipment is sized on a load profile rather than a rule of thumb. Capex is site-specific: get a power study and a quote.

See the current EA305 rates and window

The options

Capacitor bank, active filter — or a battery that only looks like one.

Capacitor bank

What it fixes: The kVAR side, statically.
When it wins: Stable inductive load — refrigeration, pumps, compressors — where the reactive draw is predictable and the site has little harmonic content.
When it fails: Sites dense with VSDs, chargers and LED drivers: capacitance can resonate with harmonics. Over-correction flips the site leading at light load.

Detuned capacitor bank

What it fixes: The kVAR side, with reactors to keep harmonics out of the resonance range.
When it wins: The common industrial answer where there is harmonic distortion but the load shape is still steady enough for stepped switching.
When it fails: Fast-swinging loads — the steps are too coarse to track the reactive draw.

Active filter

What it fixes: Reactive power and harmonics, continuously and in both directions.
When it wins: Sites with variable drives, welding, cranes, EV charging or a harmonic problem that is also damaging equipment.
When it fails: Cost. It is the most capable option and the one to justify with a power study, not a brochure.

Battery

What it fixes: kW, by shifting energy in time.
When it wins: Peaks that are short, predictable, and set by real load inside a demand window.
When it fails: Any site whose kVA charge is driven by reactive power. A battery discharging at unity power factor removes kW and only as much kVA as the power factor allows — size it in kW for a kVA charge and it under-delivers, quietly.

On a kVA tariff the order of work is: correct reactive power first, then ask whether storage is still needed for what is left. Doing it the other way round is how battery business cases quietly under-deliver. The battery case.

What goes wrong

Five traps, all of them common.

A battery does not fix power factor.It fixes a peak. If the qualifying maximum is set by reactive draw, the battery discharges real power while the kVAR stays where it was — the kVA reading falls by less than the kW you paid for.
Solar is silent after dark.A PV system generates nothing at night, and the pumps, refrigeration and compressors that create the reactive load are often still running. Daytime generation tells you nothing about the kVA maximum set at 7pm.
Over-correction is a real failure mode.Oversized capacitance takes the site leading at light load. Some tariffs and connection agreements do not reward that, and the network can see voltage rise. Stepped, automatically controlled correction exists for exactly this reason.
Harmonics are the reason a naive bank fails.Modern loads distort the waveform. Plain capacitors can amplify it. A power quality study — THD, load profile, existing correction — is what decides between a detuned bank and an active filter.
Check the basis before you spend anything.On a tariff that bills real power (kW) only, correction saves nothing on the demand line. The assigned code is printed on the bill, and the guides on this site show the basis for each one.

Worth ruling out

When power factor is not your problem.

Your tariff bills kW, not kVA.

Many small and medium business codes price demand in kW, or carry no demand charge at all. There is no reactive component to correct — the lever is timing and tariff structure, not capacitors.

Power factor is already healthy.

Corrected sites typically sit around 0.95–0.98. If the metered power factor on the bill is already in that band, the remaining kVA is real load and correction has little left to remove.

The maximum is genuine load.

If the site genuinely runs at its maximum for hours, the kVA charge reflects real capacity. The honest options there are operational scheduling, tariff change, or a larger conversation about supply capacity.

The fastest check is free: read the assigned code off the bill. If it is one of the codes in the table above, the kVA question is live. If it is not, no amount of correction equipment will move the demand line.

Quick answers

Power factor questions, short version.

What is power factor, in plain terms?: Real power (kW) is the electricity that does work. Apparent power (kVA) is what the meter and the network have to carry to deliver it. Power factor is kW divided by kVA, so a site drawing 400 kW while the meter reads 470 kVA is running at 0.85. The gap is reactive power, mostly from motors, compressors, refrigeration and transformers.
Does power factor correction actually reduce my bill?: Only where the tariff charges for kVA, or where the network applies a reactive charge. On a kVA-billed code, lower kVA at the same kW means a lower billed maximum, so the daily capacity charge or monthly demand charge falls. On a kW-billed tariff it saves nothing on demand.
Which NSW tariff codes bill in kVA?: Several Ausgrid large-business and high-voltage codes (EA305, EA310, EA314, EA315, EA365, EA370, EA390) and the Endeavour Energy large and high-voltage codes (N19, N29, N39) bill demand in c/kVA/day. Essential Energy prices demand in $/kVA/month on its large and high-voltage codes. The table on this page is generated from the current published price-list data, and each code links to its family guide.
Will a battery reduce the kVA charge?: Only partly, and only by accident. A battery discharges real power, so it reduces kVA by the amount the power factor allows at that moment. If the site is at 0.85 power factor, a battery sized on kW will not deliver the same reduction in kVA. Correct the reactive load first, then size storage for what is left.
How much can correction save?: It depends entirely on the kVA reduction and the published rate. On Endeavour Energy’s N19 high-season rate of 58.421 c/kVA/day, 50 kVA shaved for 31 days is about $905.53 in the network component. On Ausgrid’s EA305 rate of 57.7962 c/kVA/day held over 365 charge days, 62.4 kVA is about $13,169 a year. Capex varies with the site, the harmonic environment and the control gear, so it needs a quote and a power study.
Does solar make power factor better or worse?: Neither, on average, and it does not fix a night-time problem. A PV inverter can provide some reactive support if configured to, but it is idle after sunset — and the kVA maximum is often set in the evening. Low-load operation with inverters online can also move the site’s power factor around, which is why correction should be designed against the load profile, not the array.
Is power factor correction safe to install?: Installed and commissioned properly, yes — it is standard electrical plant. It must be designed by someone who has seen the load profile and the harmonic distortion, installed by a licensed electrician, and switched in steps so the site does not go leading at light load. Correction equipment interacting badly with harmonics is a design failure, not a product failure.

The next step

Two numbers on the bill decide whether this is worth doing.

The assigned tariff code says whether you are billed in kVA. The metered power factor and a year of interval data say how much of that kVA is reactive. With those, the answer is arithmetic — and it is often a capacitor bank, not a battery.

Send us your bill Find your network tariff Check the battery case

Rate sources

Endeavour Energy 2026–27 Network Price List Ausgrid network prices (2026–27 price list PDF)Essential Energy 2026–27 Network Price List and Explanatory Notes

General information only, not electrical or financial advice. Network rates change annually and the retailer’s contract decides what a site actually pays. Power factor correction must be designed on a load and harmonic study and installed by a licensed electrical contractor.

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