Quick answer
Power Factor is the ratio of real power, measured in watts, to apparent power, measured in volt-amperes, on an AC circuit. It runs from 0 to 1, and a value of 1.0 means every volt-ampere is doing useful work.
On solar inverters it explains why outputs are listed in VA, and why grid codes ask inverters to adjust it. On most home bills it does not show up at all, but large business tariffs can charge for a low one.
Quick facts
The key facts about power factor, with sources:
- Formula
- Power factor = real power (kW) ÷ apparent power (kVA) 1
- Range
- 0 to 1.0, often written as a percent or with "leading" or "lagging"
- Unit of the part that does no work
- Reactive power, in kilovars (kvar) 1
- Example inverter default
- Enphase IQ8M/IQ8A: power factor setting 1.0 3
- Example adjustable range
- 0.85 leading to 0.85 lagging (same data sheet) 3
- Business bill example
- Duke Energy Carolinas SC Schedule LGS corrects demand when PF is under 85% 6
Key takeaways
- Power factor compares the power that does work (W) with the power the wires carry (VA).
- A power factor of 1.0 means watts and volt-amperes are equal. Most home solar inverters ship set to 1.0.
- Grid codes such as IEEE 1547-2018 require inverters to be able to change their power factor on the utility’s request.
- Homes on a standard residential rate are billed by kWh, not by power factor.
- Large business rates can raise the demand charge when power factor drops below a set level.
Real power, apparent power and the gap between them
On an AC circuit the voltage and the current swing back and forth. If they rise and fall in step, all the power flowing does useful work. If they drift out of step, some of the current just sloshes back and forth without doing work.
That gives three kinds of power. Real power, in watts, does the work. Reactive power, in vars, is the part the EIA describes as doing no work. Motors and other magnetic equipment need it to run. Apparent power, in volt-amperes (VA), is the total load the wires and equipment must carry.
Power factor is real power divided by apparent power. The DOE puts it simply: electrical power is maximised when voltage and current are in sync. When they are, power factor is 1.0.
The power triangle in plain steps
- Real power (W) → the useful work: light, heat, motion
- Reactive power (var) → the back-and-forth part that magnetic loads and the grid need
- Apparent power (VA) → the total the wires carry, found as √(W² + var²)
- Power factor → W ÷ VA, a number from 0 to 1
Leading and lagging: what the words mean on a data sheet
A power factor below 1.0 comes with a direction. Lagging means current trails the voltage. Motors and transformers cause this. Leading means current runs ahead of the voltage.
Inverters can choose either. The DOE says modern inverters can both supply and absorb reactive power to help the grid. Pushing reactive power out tends to raise local voltage. Taking it in tends to lower it.
So a line on an inverter data sheet such as "0.85 leading … 0.85 lagging" means the inverter can be set anywhere in that band. It does not mean the inverter runs there by default.
Ways an inverter can manage power factor
| Mode | What the inverter does | Category A | Category B |
|---|---|---|---|
| Constant power factor | Holds one set power factor, such as 1.0 or 0.95 | Mandatory | Mandatory |
| Volt-var | Adds or absorbs vars as local voltage rises or falls | Mandatory | Mandatory |
| Watt-var | Changes vars as solar output changes | Not required | Mandatory |
| Constant reactive power | Holds a fixed var level | Mandatory | Mandatory |
| Volt-watt | Cuts real power when voltage runs high | Not required | Mandatory |
Example: reading VA and power factor on one microinverter sheet
All figures come from the Enphase IQ8M and IQ8A data sheet 3. The last row is our arithmetic.
| Data-sheet line | IQ8M value | What it tells you |
|---|---|---|
| Peak output power | 330 VA | Short-term top output, in apparent power |
| Maximum continuous output power | 325 VA | What it can hold all day |
| Power factor setting | 1.0 | Default: VA and W are equal, so 325 VA = 325 W |
| Grid-tied power factor (adjustable) | 0.85 leading … 0.85 lagging | The range a utility may ask for |
| If set to 0.85 at full output | 325 VA × 0.85 | About 276 W of real power; the rest is reactive |
The data sheet does not say the inverter will cut watts in every case, so treat the last row as the worst case at full VA. It is why a utility request for a non-unity power factor can trim kWh slightly on sunny peaks.
Example: how a low power factor raises a business demand charge
Duke Energy Carolinas’ SC Schedule LGS (effective 1 March 2026) says that when monthly power factor is under 85%, the utility may multiply billed kW by 85% and divide by the actual power factor 6. The demand number below is an example.
| Input | Math | Result |
|---|---|---|
| Measured demand | Example | 100 kW |
| Average power factor that month | Example | 80% |
| Corrected billing demand | 100 × 85 ÷ 80 | 106.25 kW |
| Apparent power at that moment | 100 kW ÷ 0.80 | 125 kVA |
At 85% or higher, no correction applies under that clause. Read more on demand charges.
Power factor compared with related measures
| Term | What it rates | Where it appears |
|---|---|---|
| Power factor | How much of the VA is real work | Inverter sheets, grid codes, business tariffs |
| Inverter efficiency | How much DC becomes AC, after losses | CEC weighted efficiency line, such as 97.5% |
| DC-to-AC ratio | Panel watts vs inverter AC rating | System design and proposals |
| Watt | Real power only | Panel and system ratings |
| Voltage | Electrical pressure | Grid limits that reactive power helps hold |
Where you will run into power factor
On an inverter data sheet. AC output is listed in VA because the inverter is limited by the current it can carry, whatever the power factor. Look for a "power factor setting" and an "adjustable" range.
In your utility’s interconnection paperwork. The utility may set a required power factor or volt-var curve for your inverter. Your installer configures it. Our interconnection guide covers the process.
On a commercial or farm power bill. Large-service tariffs can measure kVA or correct demand for low power factor. See commercial solar for how solar fits those bills.
Why inverter power factor control helps, and its trade-offs
Benefits
- Helps hold street voltage in range when many homes export at midday.
- Lets more solar connect to a line before upgrades are needed.
- Reactive power is hard to send long distances, the DOE says, so local sources like rooftop solar are useful.
- Done in software, with no extra hardware for most modern inverters.
Trade-offs
- At full output, a non-unity setting can trim real watts on a VA-limited inverter.
- Settings are set by the utility’s rules, not by the homeowner.
- Older inverters may not support the newer grid-support modes.
- Solar alone does not fix a business’s low power factor; that comes from its loads.
Sources: [2]
What power factor will not do for a home
For most homes, power factor is not a savings lever. Standard residential rates bill energy in kWh. Duke Energy Carolinas’ SC residential schedule RS, for example, has no power factor clause 7.
Power factor correction gadgets sold to homeowners often claim to cut bills. A home meter on a residential rate records real energy, so there is little or nothing to save. Spend the effort on load and rate choices instead.
Cost drivers linked to power factor
We do not give equipment prices. The cost questions around power factor are these. For a business, a low power factor can raise billed demand under clauses like the Duke LGS one above. Correction equipment, such as capacitor banks, is designed by an engineer from the site’s load data.
For a solar owner, the cost is in lost kWh if the utility requires a non-unity setting. That loss depends on how often the inverter runs at its VA limit. A high DC-to-AC ratio makes those hours more common. Ask your installer to model it. Our cost guide covers the main price drivers.
How power factor gets set on a new solar system
The homeowner does not change these settings. A licensed installer does, following the utility.
- The installer picks an inverter certified to UL 1741 SB, the test for IEEE 1547-2018, where the utility requires it 3.
- The interconnection application lists the inverter model.
- The utility approves the system and names any required grid profile or power factor setting.
- The installer loads that profile through the inverter’s gateway or app at commissioning. Enphase notes its settings are changed only by an authorised representative using its gateway 3.
- The utility gives permission to operate.
Keeping the setting right over time
Grid profiles can change after a utility updates its rules. Installers can push a new profile to many inverters remotely. If you get a notice from your utility or installer about a grid profile update, keep the letter with your system records.
If an inverter is replaced under warranty, ask the installer to confirm the new unit carries the same profile. A missed profile can trigger a utility compliance issue. Our system upgrade service covers inverter swaps.
Warning signs and when to call a pro
Call your installer or a licensed electrician if:
- Your production drops on sunny days after a utility or firmware update.
- The inverter app shows a grid-profile or compliance error.
- Your business bill adds a power factor adjustment you did not see before.
- Lights flicker or the inverter trips off when large motors start.
- Someone sells a home "power factor saver" box promising big savings.
Safety rule
Inverter grid settings are part of your interconnection agreement. Only the installer or utility should change them.
Grid codes and tariffs that set power factor
IEEE 1547-2018. This IEEE standard covers how distributed energy resources such as solar connect to and operate with the distribution grid. EPRI’s 2018 summary for Sandia’s PV symposium shows the minimum reactive power ability.
Category A must inject reactive power up to 44% of nameplate kVA and absorb up to 25%. Category B must do 44% both ways. The utility or state picks the category.
UL 1741 SB. This is the test that certifies inverters to IEEE 1547-2018. The Enphase IQ8 sheet lists IEEE 1547:2018 (UL 1741-SB 3rd Ed.) and CA Rule 21 (UL 1741-SA).
Utility tariffs. Power factor billing rules live in each tariff, approved by the state regulator. Duke Energy Carolinas SC Schedule LGS, effective 1 March 2026 under PSC Docket 2025-172-E, applies the 85% correction quoted above.
Misconceptions about power factor
- Myth VA and W are always the same.
- Reality They match only at a power factor of 1.0. Below that, VA is larger than W.
- Myth A home power factor box will cut my electric bill.
- Reality Residential rates bill kWh of real energy. Schedules like Duke SC RS have no power factor charge 7.
- Myth Power factor is the same as inverter efficiency.
- Reality Efficiency is DC in vs AC out. Power factor is how the AC output splits between real and reactive.
- Myth Inverters always run at 0.85 because the sheet says so.
- Reality The 0.85 figures are the adjustable range. The IQ8 default is 1.0 3.
Power factor rules in SC, GA and VA
In South Carolina, Duke Energy Carolinas’ large general service schedule LGS (over 75 kW demand) lets the utility correct billed demand when monthly power factor is under 85%, while its residential schedule RS has no such clause 6 7.
We have not verified the matching clauses for Georgia Power or Dominion Energy Virginia. If you run a business in those states, look for "power factor" in your rate schedule or ask your utility.
When power factor matters to you
- You run a business or farm whose bill mentions kVA or power factor.
- You are comparing inverter data sheets and see VA instead of W.
- Your utility asks for a specific grid profile before it approves your system.
- A salesperson pitches power factor correction for a home.
Next steps
- Proposal analyzerCheck the inverter lines on your quote
- Interconnection timelineSee where grid settings fit in
- Solar inverter typesWhich inverters support grid functions
Questions about power factor
What is a good power factor?
Close to 1.0 is ideal for most uses. At 1.0, all the apparent power is real power doing work. Many business tariffs set a floor. Duke Energy Carolinas’ SC Schedule LGS, for example, can raise billed demand when monthly power factor is below 85%.
Why are inverters rated in VA instead of watts?
Because the inverter is limited by the current it can carry, which sets its VA. If the utility asks it to supply reactive power, some of that VA is no longer real watts. At a power factor of 1.0, VA and watts are equal, which is how most home inverters ship.
What does "0.85 leading to 0.85 lagging" mean?
It is the range the inverter can be adjusted across. Leading and lagging describe whether the current runs ahead of or behind the voltage. The Enphase IQ8M and IQ8A list that range but ship set to 1.0. A utility can require a different setting.
Does power factor affect my home electric bill?
Usually not. Standard residential rates bill you for kWh of real energy. Duke Energy Carolinas’ SC residential schedule has no power factor clause. Power factor charges tend to appear on large commercial and industrial rates, where the utility meters kVA or corrects demand.
Do solar panels have a power factor?
No. Panels make DC power, and power factor applies to AC. The inverter creates the AC output, so the inverter sets the power factor. That is why you find power factor lines on inverter data sheets, not panel data sheets.
What is reactive power in simple terms?
It is power that moves back and forth in AC wiring without doing useful work. The EIA calls it the part of apparent power that does no work. Motors and transformers need it to build magnetic fields. The grid also uses it to hold voltage steady.
What does IEEE 1547 require about power factor?
IEEE 1547-2018 requires DER to be capable of several grid-support modes, including constant power factor and volt-var, per EPRI’s summary. Category A must inject reactive power up to 44% of kVA and absorb 25%. Category B must do 44% both ways. Your utility decides which settings are used.
Can a utility change my inverter’s power factor setting?
The utility can require a setting as part of interconnection, and your installer applies it. Some systems let the installer update settings remotely. Enphase says changes are made by an authorised representative through its gateway. Homeowners should not change grid settings themselves.
Do home power factor correction devices save money?
Generally no, on a residential rate. Those rates charge for kWh of real energy, which a correction device does not reduce in any meaningful way. Businesses billed on kVA or corrected demand are a different case, and an engineer should size any correction equipment from load data.
Does a low power factor setting reduce my solar output?
It can, at full output. If an inverter is at its VA limit, giving some of it to reactive power leaves fewer watts. At 0.85, an IQ8M at 325 VA would deliver about 276 W. Most hours are below the limit, so the yearly effect depends on your design.
Sources
- US EIA, Glossary: Power factor; Power (electrical), retrieved .
- US DOE Solar Energy Technologies Office, Solar Integration: Inverters and Grid Services Basics, retrieved .
- Enphase Energy, IQ8M and IQ8A Microinverters data sheet (DSH-00243-3.0-EN-2024-12-10), retrieved .
- IEEE, 1547-2018 Standard for Interconnection and Interoperability of Distributed Energy Resources, retrieved .
- EPRI (A. Huque), Smart Inverters and Grid Support Requirements, IEEE 1547-2018, PV Systems Symposium, May 2018 (hosted by Sandia PVPMC), retrieved .
- Duke Energy Carolinas (SC), Schedule LGS Large General Service, effective 1 March 2026 (PSCSC Docket 2025-172-E), retrieved .
- Duke Energy Carolinas (SC), Schedule RS Residential Service (Docket 2025-172-E), retrieved .
Expert review
Written by the HyreSolar Research team. Not yet reviewed by an outside expert. We say so rather than imply a review that has not happened; see our editorial policy.
How the numbers were checked: Definitions from the EIA glossary and DOE; inverter values from the Enphase IQ8M/IQ8A data sheet; IEEE 1547-2018 categories and modes from EPRI’s 2018 summary (the standard text itself was not available to us); tariff language quoted from Duke Energy Carolinas SC schedules LGS and RS.
Examples are arithmetic on those figures.
Suggest a correction. We fix errors and say what changed.