SOME COST IMPLICATIONS OF ELECTRIC POWER FACTOR CORRECTION AND LOAD MANAGEMENT BY HERCULES VISSER Dissertation submitted in partial fulfilment of the requirements for the degree Magister Philosphiae in Engineering Management In the Faculty of Engineering at the Rand Afrikaans University Supervisor: Prof. J.H. Pretorius Co. Supervisor: Prof. L. Pretorius May 2001 ACKNOWLEDGEMENTS I would like to thank my Creator for the ability and guidance He gave me during this study. Without His support, this work would not have been possible. What shall I render to the Lord For all His benefits toward me? Ps. 116:12 Then I would like to thank various people for their direct and indirect contributions to this research study: My wife, Ria, for her encouragement and support. Prof J.H. Pretorius and Prof L. Pretorious for the privilege to study under them and for their patience and wise guidance. "Everything should be made as simple as possible, but not simpler." Albert Einstein. 1879 - 1955 SUMMARY Presently, ESKOM is rated as the fifth largest utility in the world that generates and distributes electricity power to their consumers at the lowest price per kilowatt-hour (kW.h). As a utility, ESKOM is the largest supplier of electrical energy in South Africa and is currently generating and distributing on demand to approximately 3000 consumers. This represents 92% of the South African market. ESKOM was selected as the utility supplying electrical energy for the purpose of this study. ESKOM's objective is to provide the means and systems by which the consumer can be satisfied with electricity at the most cost-effective manner. In order to integrate the consumers into these objectives, ESKOM took a decision in 1994 to change the supply tariff from active power (kW) to apparent power (kVA) for a number of reasons: To establish a structure whereby the utility and the consumer can control the utilisation of electrical power supply to the consumer. To utilise demand and control through power factor correction and implementation of load management systems. To identify some cost implications of electrical power factor correction and load management. Consumers with kW maximum demand tariff options had little or no financial incentives to improve their low power factor (PF) by reducing their reactive current supply. Switching to (kVA) maximum demand will involve steps to be taken to ensure that the reactive component is kept to a minimum with maximum power factor. ESKOM has structured various tariff rates and charges with unique features that would accommodate the consumers in their demand side management and load cost requirements, which, when applied, will result in an efficient and cost effective load profile. These tariffs are designed to guide consumers automatically into an efficient way of using electrical power, as it is designed to recover both the capital investment and the operating cost within two to three years after installation of power factor correction equipment. ESKOM's concept of Time-of-use (TOU) periods for peak, standard and off-peak times during week, Saturday and Sunday periods is discussed as load management. Interruptible loads can be scheduled or shed to suit lower tariff rates and to avoid maximum demand charge. The concept of load management will change the operation pattern of the consumer's electricity demand whereby the consumer will have immediate technical and financial benefits. In the last chapter of this dissertation, a hypothetical case study addresses and concludes on some of the technical and cost implications of electrical power factor correction and load management as a successful and profitable solution to optimize electrical power supply to the consumer. By implementing the above, ESKOM ensures that the consumer utilizes the electrical power supply to its optimum level at the lowest cost per kilowatt- hour (kW.h) generated. OPSOMMING ESKOM is tans die vyfde grootste verskaffer in die wereld wat elektriese drywing genereer en versprei na kliente teen die laagste eenheidsprys per kilowatt-uur (kW-uur). ESKOM is die grootste verskaffer van elektriese energie in Suid-Afrika en ontwikkel en versprei elektriesie energie op aanvraag na ongeveer 3000 kliente wat ± 92% van die Suid-Afrikaanse mark verteenwoordig. Vir die doel van hierdie studie word ESKOM gekies as die verskaffer van elektriese energie. ESKOM se doelwit is om middele en stelsels te voorsien wat tevredenheid sal besorg aan kliente sodat hulle die beste en mees effektiewe koste-voordeel van elektriese verbruik kan geniet. Om te verseker dat die klient 'n deelname in hierdie doelwitte het, het ESKOM 'n besluit gedurende 1994 geneem om die voorsieningstariewe van aktiewe drywing (kW) na skynbare drywing (kVA) te verander vir 'n aantal redes: Om 'n struktuur daar te stel waarby die voorsiener en die klient die bestuur en benutting van elektriese drywingstoevoer optimaal kan beheer. Aanvraag en ladingsbeheer kan benut word deur arbeids-faktor regstelling en die implementering van lading bestuurstelsels. Om sekere koste-implikasies van elektriese en arbeids-faktor regstelling en ladingsbestuur te identifi seer. Kliente met (kW) maksimum aanvraag tarief-opsies het min of geen finansiele voordeel om sodoende die lae arbeidsfaktor (PF) te verbeter deur die reaktiewe stroom lewering te verminder. Die oorskakeling na kVA maksimum aanvraag sal tot gevolg he dat versekerde stappe geneem sal word om die reaktiewe komponente tot a minimum te beperk met 'n maksimum arbeidsfaktor. ESKOM het verskeie strukture met tariewe en unieke kenmerke wat die klient sal skik in sy terrein van bestuurs-aanvraag en ladingskoste vereistes. Wanneer dit wel geimplimenteer word, het dit doeltreffende en koste-effektiewe ladingsprofiele. Hierdie tariewe is ontwerp om die klient outomaties na 'n meer doeltreffende metode van die gebruik van elektriese ladingsbestuur te lei, omdat dit ontwerp is vir beide kapitaal belegging en bedryfskoste herwinning binne twee tot drie jaar na die installering van arbeidsfaktor regstellingstoerusting. ESKOM se konsep vir ladingsbestuur word bespreek en dit behels die gebruik van periodes van tye van drywingsverbruik (TOU) waaronder spits-, standaard- en laagtyd verduidelik word, betreffende weekstye, Saterdae en Sondagperiodes. Onderbroke ladings kan geskeduleer of gekanselleer word sodat die lae verbruikstariewe in aanmerking kan kom en maksimum aanvraag kostes vermy kan word. Hierdie konsep van ladingsbestuur sal die bedryfspatroon van die klient se elektriese aanvraag verander en daardeur sal die klient onmiddellike tegniese en finansiele voordeel geniet. `n Hipotetiese gevallestudie word aangespreek wat van die tegniese en koste implikasies van arbeidsfaktor-regstelling en ladingsbestuur as 'n suksesvolle en winsgewende oplossing uitwys en sodoende die kragvoorsiening na die klient optimaliseer. Deur die bogenoemde to implimenteer, verseker ESKOM dat die klient elektriese kragvoorsiening optimaal sal aanwend teen die laagste koste per kilowatt-uur (kW-uur). TABLE OF CONTENTS ACKNOWLEDGEMENTS SUMMARY CHAPTER 1 ELECTRICITY SUPPLY IN SOUTH AFRICA PAGE Introduction 1 1.1 Historical background 1 1.2 Presently 2 1.3 Problem statement 3 1.4 The structure of the study 5 1.5 Objectives of power factor correction 6 1.6 Conclusion 9 CHAPTER 2 POWER FACTOR CORRECTION 2.1 Introduction 10 2.2 What is power factor correction (PFC) 11 2.2.1 Constant kW correction 12 2.3 The importance of power factor correction 14 2.4 Some technical disadvantages of a poor power factor 16 2.5 Some methods of obtaining a good power factor 17 2.6 The need for power factor correction 19 2.6.1 Technical reasons 20 2.6.2 Economic reasons 20 TOC 1 2.7 The impact of poor power factor on the utility 21 2.8 Factors affecting power factor levels 22 2.9 Power factor measurement 22 2.10 Capacitor Rating 25 2.11 Conclusion 25 CHAPTER 3 TARIFF STRUCTURES OF THE UTILITY 3.1 Introduction 27 3.2 The approach 28 3.3 Tariffs 29 3.4 Tariff options 30 3.5 Time-of-use (TOU) tariffs 31 3.6 Tariffs on power factor 32 3.7 Cost implications for time-of-use 34 3.8 Implication of tariffs 34 3.9 Two-part tariffs 37 3.9.1. Capital investment costs 37 3.9.2. Running costs 38 3.10 Conclusion 38 CHAPTER 4 LOAD MANAGEMENT 4.1 Introduction 40 4.2 Load management planning 41 TOC 2 4.2.1. Planning 41 4.3 Load Measurement categories 44 4.3.1 Load factor 44 4.3.2 Interruptible loads 45 4.3.2.1 Interruptible electric service 46 4.3.2.2 Appliance control 46 4.3.2.3 Demand limitations 46 4.3.3 Strategic conservation 46 4.3.4 Energy management 47 4.4 Time-of-use load scheduling 48 4.4.1 ESKOM's Megaflex / Miniflex / Ruraflex 49 4.4.2 ESKOM's night-save 51 4.5 Time-of-use maximum demand 52 4.6 The need for load shedding 53 4.6.1 Primary load shedding 54 4.6.2 Frequency load shedding 54 4.6.3 Manual load shedding 55 4.6.4 Maximum peak power demand shedding 55 4.7 Demand control 55 4.8 Conclusion 57 CHAPTER 5 CASE STUDY 5.1 Introduction 59 TOC 3 5.2 Problem statement 60 5.3 Case study 60 5.4 Approach to the case study 61 5.5 Power supply and improvements 61 5.6 Summary of the case study 63 5.7 Conclusion 64 CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS 6.1 Final conclusion 66 6.2 Recommendations 67 ANNEXURE TO THE CASE STUDY 7 Power supply and improvements 69 7.1 Power load distribution 69 8 ESKOM's tariffs and charges for 2001 70 8.1 Annual energy cost before power factor correction 71 8.2 Annual cost saving after power factor correction 71 8.3 Annual