Hey friends!
while reading about power factor in my electrical books, I read that industries want to keep their power factor as nearer to one as possible for economical reasons. can someone tell me how does the power factor affect the economics of an industry?
Also tell me why the power factor cannot exceed one?....Thanks,Faheem

 

power factor = true power/apparent power.

the reason why it cant be more than one is becuase you cannot have more true power than apparent power. true power is the current and voltage waveforms in the circuit that are actually powering loads. Apparent power is the power that you may be reading or the amount of power that the circuit is appearing to consume. Say for example you had a big inductor hooked up on your circuit. it would draw current at 90degrees to the voltage waveform. as such ideally it would be drawing no power. but the problem is if the current drawn is substantial the power lines and various other components in the circuit that are resistive will still draw power from that current waveform as their votage waveforms will be in phase (or close to) with the current waveform.

the current that the inductor will draw is called reactive power. it is desireable to remove as much of this as possible from the power lines as it constitutes wasted energy serving only to heat up the power lines.

this site's own texts have an excellent explanation of this and is where i learned about it myself.
http://www.allaboutcircuits.com/vol_2/chpt_11/2.html

 

To add a little to mentaaals response
It is in the customers best interest to keep his pf as near 1 as possible not only because some power companies charge a penalty for low pf, but because any "extra" current flow (which occurs increasingly as pf lowers)must be planned for in the sizing of Wiring, breaker panels, transformers, and switchgears. Use a transformer as an example. If a large industrial plant were to have a load of nearly 5 Megawatts (true power)and it was careful to keep its pf near 1, then a transformer rated at 5 MVA would probably be sufficient. If this same plant were to neglect pf correction and allow its overall pf to degrade to say 70%, it would take a transfomer rated at 7 MVA to serve its load. When purchasing transformers of this size, any increase in rating makes for a much larger price tag. The added costs of maintaining larger transformers must also be considered. Other necessary equipment will cost more as well because it will have to be larger to carry the higher current levels. It is always in the best interest of the consumer (business customers, not necessarily a single home or apartment) to monitor and maintain their pf as near to 1 as possible.

 

At the utility I worked for, they only bill customers for real power consumed.

They do keep track of apparent power consumed by large industrial customers, and start charging substantial penalties if the pf falls below 0.85. 0.80 is the absolute minimum.

Residential and commercial customers typically stay above 0.95, so there usually was no need to worry about it from the utility's perspective.