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Configure solarIf your power factor drops below 0.85, TNB charges a reactive energy penalty at RM0.022/kVARh. A factory with PF of 0.75 typically overpays RM2,000–15,000 per month. Learn the exact math, fix options, and how solar can deliver a double win on your electricity bill.
0.85
Min PF Required
2.20 sen
Per kVARh Penalty
0.95+
Target PF
6–18 mo
Payback Period
Power factor (PF) is the ratio of real power (kW) to apparent power (kVA). It measures how efficiently your electrical system converts supplied power into useful work. A PF of 1.0 means 100% efficiency — every volt-ampere is doing useful work. A PF of 0.75 means 25% of supplied current is "wasted" as reactive power (kVAR) that generates heat and overloads your wiring.
Think of a beer glass: kVA is the full glass, kW is the beer (useful), kVAR is the foam (wasted). A high power factor means more beer, less foam.
PF = kW / kVAPower factor is always between 0 and 1
kVAR = sqrt(kVA^2 - kW^2)Reactive power — wasted, penalised by TNB
kW = kVA x PFHigher PF = lower MD charge for same load
Under TNB's supply conditions for commercial and industrial tariffs (C1, C2, E1, E2, E3), you must maintain a monthly average power factor of at least 0.85 lagging. Fall below this threshold and TNB bills you for every kVARh of reactive energy consumed — at a rate of 2.20 sen (RM0.022) per kVARh.
2.20 sen/kVARh (RM0.022)
Reactive energy penalty rate
0.85 minimum PF required
Applies to C1, C2, E1, E2, E3
Target 0.95+ to eliminate penalty
Recommended target for factories
TNB Power Factor Scale
Enter your monthly kWh consumption and current power factor to see your exact kVARh penalty — and your savings if corrected to 0.95.
kWh/month
Below 0.85 — penalty applies
Monthly kVARh (Reactive Energy)
44,096
kVARh/month
Monthly kVARh Penalty
RM 288
per month
Annual Penalty
RM 3,461
per year
Savings if PF Corrected to 0.95
RM 288
per month
Based on TNB reactive energy penalty rate of RM0.022/kVARh (lagging). Applies to C1, C2, E1, E2, E3 tariff consumers when PF < 0.85.
Most industrial and commercial sites suffer from low power factor due to inductive loads. Understanding the culprits is the first step to fixing them.
The #1 cause of low PF in Malaysian factories. Induction motors draw reactive magnetising current to create their rotating magnetic field. A lightly loaded motor is far worse — a 75kW motor running at 20% load can drag PF down to 0.40. This affects conveyor belts, compressors, fans, and pumps.
PF drops to 0.60–0.80Older fluorescent tube lights with magnetic ballasts and high-intensity discharge (HID) lamps (metal halide, sodium vapour) have inherently low power factor, typically 0.50–0.70. Large commercial buildings and warehouses with legacy lighting systems often see PF penalties from this alone. LED retrofits fix this.
PF drops to 0.50–0.70Air conditioning compressors — especially large chiller plants in shopping malls, hotels, and office buildings — are major reactive power consumers. A 200-ton chiller with poorly maintained capacitors and an aging compressor motor can have PF as low as 0.65. This is the dominant cause of low PF in commercial buildings.
PF drops to 0.65–0.80Distribution transformers draw magnetising reactive current even at no load. This is particularly significant when factories have oversized transformers running at low utilisation (below 30%). The reactive current from the transformer core magnetisation directly reduces your site power factor.
PF drops to 0.85–0.92Electric arc welding, induction heating, and arc furnaces generate significant reactive power due to their pulsating and non-linear load characteristics. Steel fabrication plants, shipyards, and heavy engineering workshops are particularly affected. These loads also introduce harmonics that can cause additional issues for capacitor banks.
PF drops to 0.60–0.75These solutions are ranked by cost-effectiveness. Most Malaysian factories achieve PF correction to 0.95+ within 12–24 months payback.
1. Automatic Capacitor Banks (APFC)
Automatic Power Factor Correction (APFC) panels use capacitor steps that switch in and out automatically based on real-time reactive demand measurement. This is the most widely deployed PF correction solution in Malaysia. Install at your main distribution board (MDB) or sub-distribution boards near major inductive loads. Capacitors inject leading reactive current (kVAR) that cancels out the lagging reactive current from motors — instantly improving PF.
Investment
RM8,000–40,000
PF Savings
Eliminate 100% of kVARh penalty + 5–15% MD reduction
Payback
6–18 months
2. Variable Speed Drives (VSD/VFD)
Variable Speed Drives on pumps, fans, compressors, and conveyor belts reduce reactive power consumption by matching motor speed to actual load demand. A VSD-equipped motor at 80% speed consumes roughly 50% of the reactive power of a full-speed motor. VSD also prevents the catastrophic PF drop that occurs when motors run lightly loaded. Modern VSDs have built-in power factor correction.
Investment
RM5,000–20,000 per motor
PF Savings
PF improvement to 0.90–0.98 + 20–40% motor energy savings
Payback
18–36 months
3. Active Harmonic Filters (AHF)
For facilities with significant non-linear loads (VFDs, UPS systems, LED drivers, welding equipment, arc furnaces), passive capacitor banks can fail or resonate dangerously. Active Harmonic Filters measure the harmonic distortion in real time and inject counter-harmonics to cancel them — simultaneously correcting power factor. AHF is the correct solution for electronics manufacturing, data centres, and heavy welding operations.
Investment
RM30,000–150,000
PF Savings
PF correction + harmonic mitigation (protects equipment)
Payback
24–48 months
4. Solar Inverter VAR Support
Modern grid-tied solar inverters (Huawei SUN2000, SMA Tripower, Sungrow SG series) can be configured to inject reactive power (leading kVAR) to offset lagging loads on-site. This VAR support functionality is available on inverters above 30kW and can improve site PF by 0.05–0.15 during solar generation hours (7am–6pm). It does not fully replace a dedicated APFC panel but provides a meaningful supplementary correction at zero additional hardware cost.
Investment
RM0 extra (part of solar system)
PF Savings
PF improvement 0.05–0.15 during daylight hours
Payback
Immediate (no extra cost)
5. LED Lighting Retrofit
Replace fluorescent and HID lighting with quality LED fixtures that include built-in power factor correction (PF above 0.95). A 10,000sqm warehouse with 400 fluorescent fittings can reduce reactive load by 30–50kVAR through a full LED retrofit. LED fixtures also consume 50–70% less active power (kW), which reduces both your kWh bill and your maximum demand simultaneously.
Investment
RM20,000–100,000 (depending on scale)
PF Savings
PF improvement + 50–70% lighting energy savings
Payback
18–30 months
Fixing power factor and installing solar together creates a compounding savings effect. Higher PF reduces your apparent kVA demand — which directly lowers your TNB maximum demand (MD) charge since MD is measured in kW and kW = kVA × PF. At the same time, solar reduces your kWh consumption. The combination delivers savings from three directions simultaneously.
PF correction stops the reactive energy penalty charge completely.
Higher PF means lower kW for the same kVA — your MD reading drops automatically.
Solar generation offsets your daytime energy consumption directly.
Modern grid-tied inverters (Huawei SUN2000, SMA Tripower) can inject leading reactive power to further improve site PF.
Real-world example: A Selangor factory with 200kVA transformer demand at PF 0.75 draws 150kW real power. After APFC correction to PF 0.95, the same 150kW real power only requires 158kVA apparent demand — reducing transformer loading by 21% and cutting wiring losses. Combined with solar, total bill reduction of 25–35% is achievable within 2 years.
Your monthly TNB bill (for C1/C2/E1 tariffs) contains the information needed to calculate your actual power factor and penalty charges. Here is what to look for:
Your main consumption
LOOK HERE — if non-zero, PF may be below 0.85
Highest 30-min peak this month
185 x RM89.27
Your kVARh penalty — AVOIDABLE
Calculate your actual PF from bill data:
PF = kWh / sqrt(kWh^2 + kVARh^2) = 48500 / sqrt(48500^2 + 30188^2) ≈ 0.85Your actual PF = kWh / sqrt(kWh^2 + kVARh^2). If kVARh/kWh ratio > 0.62, you are below 0.85 PF and paying penalties.
kWh (Active Energy) — the main energy line
kVARh (Reactive Energy) — the penalty trigger line
Max Demand (kW) — your peak demand reading
Reactive Charge — the penalty line (RM0.022 x kVARh)
Book the RM100 priority site visit with Trexon certified engineers, fully credited when you proceed. We measure your site PF, calculate your exact penalty exposure, and recommend the most cost-effective correction solution — capacitor bank sizing included.