There are so many ways to increase energy efficiency. The use of energy efficient motors, variable speed drives or energy efficient lighting are some methods to increase system efficiency. These methods of course require replacement of existing equipment.
The simplest and personally, I believe to be the least expensive method to become energy efficient is Power Factor Correction. A 10% increase in power factor reduces system losses by 12%. This means that any investment on power factor correction, regardless whether power utilities provide incentives on not, will be recovered in a few years through the reduction of energy billing.
From above diagrams, reducing the power factor (cos φ), reduces the total system KVA with the same KW of load. The reduction means that the system I2R will be lower, reducing system losses increasing system energy efficiency.
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