Is a power factor of 0.85 good?

Short answer: A power factor of 0.95 or higher is generally considered acceptable. Power factor is the ratio between active power, which does useful work, and reactive power, which circulates in the system without doing useful work. You pay for both.

Although power factor can vary slightly throughout the day as electrical loads change, it is usually fairly stable overall. In practical terms, anything below 0.95 can lead to higher energy costs and potential system issues. Power factor values around 0.8, 0.7, or lower are considered poor and will almost certainly result in reactive charges and inefficiencies.

What matters most in practice isn’t the number itself, but whether you are being charged for it.

How can I find my reactive power charges?

Reactive charges do not always appear clearly on energy bills. They may be listed under different names or grouped within other charges. 

Common terms include:

• Reactive power charges

• kVArh or kvarh charges

• Excess reactive energy

• Reactive energy surcharges

If you are unsure whether these charges apply, an electrical engineer or a professional power factor correction installer can review your bill and confirm whether corrective equipment would be beneficial. 

If helpful, you can also send us a copy of your energy bill for a free review, or speak to any qualified power factor correction provider for an independent assessment.

What usually happens next

The next step is often an internal review. In many cases, the relevant data already exists, but earlier discussions may have stalled because power factor correction was treated as a capital expenditure project. Looking at the same information again, without that assumption, can change how the issue is viewed.

This stage is typically about understanding the problem clearly and bringing technical and financial teams together to reach a decision.

Possible next steps

Discuss the issue with your engineer or contractor

Your engineer or contractor will usually already have the relevant site data and understand the technical solution. What may be less familiar is the newer approach to funding these installations, where ongoing charges are used to pay for the work.

Review the plain-English guide

If you’re curious about what sits behind the numbers, this short guide provides a plain-English overview of power factor correction.

Become a Power Factor Wizard in Your Lunch Hour (PDF) is written for directors, finance teams, and environmental managers who want a general understanding of the topic, without technical depth.

Share the information internally

If useful, sharing this information with other stakeholders can be a good starting point. Engineering, finance, or board colleagues can review the same content independently.

← Back to questions overview

Note:

Power factor correction sits at the intersection of technical analysis and commercial decision-making. Engineers tend to focus on measurements and system behaviour, while finance and board-level stakeholders focus on risk and cash flow.

We exist to bring those perspectives together. By removing the budget barrier and allowing you to work with the team you already trust, technical insight and financial common sense line up, turning deferred technical projects into straightforward bottom-line savings sooner.