kW vs kVA on a business electricity bill

A kilowatt is the power your equipment actually converts into work, and a kilovolt ampere is the total power the network has to deliver to supply it, including the part that circulates without doing any work. On a site with motors, compressors or older lighting the kVA figure is the larger of the two, and the ratio between them is your power factor.

The difference is not academic if your demand charge is priced per kVA, because then you are billed on the larger number. This page is the detail behind the kW and kVA line on your bill. For how the charge itself is calculated and reduced, demand charges explained is the fuller treatment.

What is the difference between kW and kVA?

Kilowatts measure real power, the portion of the supply that does work: turning a motor, heating an element, lighting a room. Kilovolt amperes measure apparent power, the total the network must carry to deliver that work, real and reactive together.

Reactive power is the part that flows back and forth without producing anything useful. It exists because motors and transformers store energy in magnetic fields and return it each cycle. It does no work, but the network still has to be sized to carry it, which is why some tariffs bill on it.

On a purely resistive site, one with only heating and older incandescent lighting, kW and kVA are effectively the same figure.

What is power factor on an electricity bill?

Power factor is the ratio of real power to apparent power at a site, expressed as a number between 0 and 1, and it tells you how much of the supply your site draws is doing useful work.

A power factor of 1.0 means every kilovolt ampere delivered becomes a kilowatt of work. A power factor of 0.8 means a fifth of the delivered capacity is circulating without producing anything. Sites with lots of induction motors, refrigeration, welding plant or older fluorescent lighting sit lower. Offices running mostly electronics and LED lighting usually sit higher.

Most bills do not print your power factor. Where it appears at all it is usually beside a kVA demand line.

How do you convert kVA to kW?

Multiply the kVA figure by the power factor to get kW, and divide kW by the power factor to go the other way. That single relationship is the whole conversion.

Here is the arithmetic on made up numbers, so the shape is clear. A site records a peak of 40 kW of real power at a power factor of 0.8. Its apparent power at that moment is 40 divided by 0.8, which is 50 kVA. On a tariff billed per kW it is charged on 40. On a tariff billed per kVA it is charged on 50, for exactly the same work: 25 per cent more, from the power factor alone.

Why does my bill charge demand in kVA instead of kW?

Because the network has to be built for apparent power, not real power. Cables, transformers and switchgear are sized for the current they carry, and reactive current is current, so a distributor recovering the cost of that capacity has a defensible reason to bill on kVA.

Which unit applies is set by your distribution network's tariff rather than by your retailer, and it usually tracks connection size and metering. Larger connections are more likely to be billed on kVA. Your retailer sells a plan on top of whatever the network assigned, so a retailer cannot switch the unit for you.

Does a poor power factor actually cost me money?

On a kVA tariff, yes, directly: a lower power factor raises the kVA figure your demand charge is calculated on without changing a single kilowatt hour of consumption. On a kW tariff it mostly does not, because the charge is struck on real power.

Some networks also apply a separate power factor charge or an excess reactive power charge, which is a third arrangement again. So the honest answer is that the cost depends on which unit your tariff uses, and the only way to know is to read the demand line on your own bill rather than to assume.

What causes a poor power factor at a business site?

Induction motors running lightly loaded are the usual cause. A motor sized for a job much larger than the one it does draws close to its full reactive load while producing little real work, which pulls power factor down.

The common culprits are refrigeration and cool room compressors, air handling and ventilation fans, pumps, lifts, welding equipment, older fluorescent lighting with magnetic ballasts, and any oversized plant that cycles on and off. Sites that are mostly computers, LED lighting and modern electronics tend to sit high without anyone doing anything about it.

Will power factor correction reduce my bill?

Only if you are billed on kVA or on reactive power, and then it can, measurably. Correction equipment, usually capacitors, supplies the reactive component locally so the network delivers less apparent power for the same work.

That is also why it is sold hard, sometimes to sites that cannot benefit. On a tariff billed purely in kW, correcting power factor reduces a figure you are not charged on. Before agreeing to anything, establish which unit your demand line is priced in and whether your bill carries a reactive or power factor charge at all. That is a five minute check and it decides the entire business case.

How do I tell whether my tariff bills in kW or kVA?

Read the unit printed beside the demand line on your bill. It will say kW or kVA, and the rate beside it will be per kW or per kVA, sometimes per day and sometimes per month.

If every line on the bill is priced in kilowatt hours and cents per kilowatt hour, you are not on a demand tariff and neither unit is being charged to you. If the line is there but the label is ambiguous, the tariff name and code on the bill will resolve it, and your distributor publishes the tariff structures under that code.

Does the kW or kVA distinction change how Fix Your Bill prices a plan?

It changes what we will and will not assume. Where a plan's published terms name kVA but publish no power factor, and your bill prints none either, we price the demand one for one against the kW your bill states, and we say that no conversion was applied.

The alternative would be to invent a power factor to make the arithmetic look complete. That produces a confident number that is wrong by however much we guessed, and on a kVA tariff the guess sits directly on the charge. A stated gap is more useful to you than a filled one.

Is kVA the same as the size of my connection?

Related but not the same. Your connection has a maximum capacity, often expressed in kVA or in amps per phase, and that is a physical and contractual limit on what the site can draw. Your billed demand is what you actually drew inside the measured window.

A site can sit well under its connection capacity and still carry a large demand charge, because the charge follows the recorded peak rather than the limit. Where a charge is struck on contracted capacity instead of recorded demand, changing it is a conversation with your distributor about the connection rather than a change to how you run the site.

Related reading

For how a demand charge is calculated, when the measured window applies and how to bring a peak down, demand charges explained is the main guide. To locate the kW or kVA line and everything around it, how to read a business electricity bill walks the bill in order.

And to find out what your own site would pay across the published plans, upload your business bill or start at business electricity plans. The engine prices the demand line as your bill states it, ranks by projected annual cost, and flags any plan it cannot fully price rather than guessing at it.