1.

On feeders with light load where the minimum load per phase beyond the capacitor bank
does not exceed 150 pecent of the per phase rating of the capacitor bank.
2. On feeders with single-phase breaker operation at the sending end.
3. On fixed-capacitor banks
4. On feeder sections beyond a sectionalizing-fuse or single-phase recloser
5. On feeder with emergency load transfers.

However, the ungrounded-wye capacitor banks are recommended if one or more od the
following conditions exist.
1. Excessive harmonic currents in the substation neutral can be precluded.
2. Telephone interferences can be minimized.
3. Capacitor-bank installation can be made with two single-phase switches rather than with
three single-pole switches.

Usually, grounded-wye capacitor banks are employed only on four-wire three-phase primary
systems. Otherwise, if a graounded-wye capacitor bank is used on a three-phase three-wire
ungrounded-wye or delta system, it furnishes a graound current source which mmay disturb
sensitive ground relays.

8-6 ECONOMIC JUSTIFICATION FOR CAPACITORS

Loads on electric utility system include two components : active power (measured in kilowatts)
and reactive power (measured in kilovars). Active power has to be generated at power plands,
whereas reactive power can be provided by either power plants or capacitors. It is a well-known
fact that shunt power capacitors are the most economical source to meet the reactive power
requirements of inductive loads and transmission lines operating at a lagging power factor.
When reactive power is provided only by power planst, each system component (i.e.,
generators, transformers, transmission and distribution lines, switchgear, and protective
equipment) has to be increased in size accordingly. Capacitors can mitigate these conditions by
decreasing the reactive power demand all the way back to generation equipment. As a result,
losses and loadings are reduced in distribution lines, substation transformers, and transmission
lines. Depending upon the uncorrected power factor of the system, the installation of capacitors
can increase generator and substation capability for additional load at least 30 percent and can
increase individual circuit capability, from the voltage regulation point of view, approximately
30 to 100 percent. Furthermore, the current reduction in transformer and distribution equipment
and lines reduces the load on these kilovoltampere-limited apparatus and consequently delays the
new facility installations. In general, the economic benefits force capacitor banks to be installed
on the primary distribution system rather than on the secondary.

It is a well-known rule of thumb that optimum a mount of capacitor kilovars to employ is always
the amount at which the economic benefits obtained from the addition of the last kilovar exactly
equals the installed cost of the kilovars of capacitors. The metods used by the utilities to
determine the economic benefits devired from the installation of capacitors vary from company
to company, but the determination of the total installed cost of a kilovar of capacitors is easy and
straightforward.
 In general, the economic benefits that can be derived from capacitor installation can be
summarized as :
1. Released generation capacity
2. Released transmission capacity
3. Released distribution substation capacity
4. Additional advantages in distribution system :
a. Reduced energy (copper) losses
b. Reduced Voltage drop and consequently improved voltage regulation
c. Released capacity of feeder and associated apparatus
d. Postponement or elimination of capital expenditure due to system improvements and/or
expansions
e. Revenue increase due to voltage improvements.

8-6-1 Benefits Due to Released Generation Capacity

The released generation capacity due to the installation of capacitors can be calculated
approximately from

when > 0,10

(8-21)

x when ≤ 0,10
(8-22)

where G = released generation capacity beyond maximum generation capacity at original

power factor, kVA
SG = generation capacity, kVA
Qc = reactive power due to corrective capacitors applied, k var
cos = original (or uncorrected or old) power factor before application of capacitors

Therefore the annual benefits due to the released generation capacity can be expressed as.

G = G x CG x iG (8-23)

where G = annual benefits due to released generation capacity, $/yr

G = released generation capacity beyond maximum generation capacity at original
power factor, k V A
CG = cost of (peaking) generation, $/kW
iG = annual fixed charge rate applicable to generation

8-6-2 Benefits Due to Released Transmission Capacity

The released transmission capacity due to the installation of capacity can be calculated
approximately as.

when > 0,10

(8-24)

x when ≤ 0,10
(8-25)

where r = released transmission capacity beyond maximum transmission capacity at

original power factor, k V A
Sr = transmission capacity, k V A

Thus the annual benefits due to the released transmission capacity can be found as

r = r x Cr x ir (8-26)

where r = annual benefits due to released transmission capacity, $/yr

r = released transmission capacity beyond maximum transmission capacity at
original power factor, kVA
Cr = cost of transmission line and associated apparatus, $/kVA
ir = annual fixed charge rate applicable to transmission

8-6-3 Benefits Due to Released Distribution Substation Capacity

The released distribution substation capacity due to the installation of capacitors can be found
approximately from.

when > 0,10

(8-27)

x when ≤ 0,10
(8-28)

+
Also called carrying charge rate. It is defined as that portion of the annual revenue requirements which
results from a plant investment. Total carrying charges include (1) return (on equity and debt), (2) book
depreciation, (3) taxes (including a mount paid currently and a mounts deferred to future years), (4) insurance, and
(5) operations and maintenance. It is expressed as a decimal.
Note that the symbol Sr now stands for transmission capacity rather than transformer capacity.
where s = released distribution substation capacity beyod maximum substation capacity at
original power factor, kVA
SS = distribution substation capacity, kVA

Hence the annual benefits due to the released substation capacity can be calculated as

s = s x Cs x is (8-29)

where s = annual benefits due to the released substation capacity, $/yr

s = released substation capacity, kVA
Cs = cost of substation and associated apparatus, $/kVA
is = annual fixed charge rate applicable to substation

8-6-4 Benefits Due to Reduced Energy Losses

The annual energy losses are reduced as a result of decreasing copper losses due to the
installation of capacitor. The conversed energy can be expressed as.

ACE = kWh/yr (8-30)

where ACE = annual conserved energy, kWh/yr

Qc.3 = three-phase reactive power due to corrective capacitors applied, k var
R = total line resistance to load center, Ω
SL,3 = original, i.e., uncorrected, three-phase load, kVA
sin = sine of original (uncorrected) power-factor angle
VL-L = line-to-line voltage, kV

Therefore the annual benefits due to the conserved energy can be calculated as

ACE = ACE x EC (8-31)

where ACE = annual benefits due to conserved energy, $/yr

EC = cost of energy, $/kWh

8-6-5 Benefits Due to Reduced Voltage Drops

The following advantages can be obtained by the installation of capacitors into a cicuit :
1. The effective line current is reduced, and consequently both IR and IX L voltage drops are
decreased, which results in improved voltage regulation.
2. The power-factor improvement further decreases the effect of reactive line voltage drop.
 The percent voltage drop that occurs in a given circuit can be expressed as

% VD = ( 8-32)

where % VD = perent voltage drop

SL.3 = there-phase load, kVA
r = line resistance, Ω/mi
x = line reactance, Ω/mi
l = length of conductors, mi
VL-t = line-to-line voltage, kV

The voltage drop that can be calculated from Eq. (8-32) is the basis for the application of
the capasitors. After the application of the capacitors, the system yieds a voltage rise due to the
improved power factor and the reduced effective line current. Therefore the voltage drops due to
IR and IX L are minimized. The approximate value of the perent voltage rise along the line can
be calculated as.

% VR = (8-33)

Furthermore, an additional voltage-rise phenomenon through every transformer from the

generating source to the capacitors occurs due to the application of capacitors. It is independent
of load and power factor of the line and can be expressed as.

% VRr = xr (8-34)

where % VD = percent voltage rise through transformer

Sr.3 = total there-phase transformer rating, kVA
xr = percent transformer reactance (approximately equal to transformer’s nameplate
impededance)

8-6-6 Benefits Due to Released Feeder Capacity

In general, feeder capacity is restricted by allowable voltage drop rather than by thermal
limitations (as seen in Chap. 4). Therefore the installation of capacitors decreases the voltage
drop and consequently increases the feeder capacity. Without including the released regulator or
substation capacity, this additional feeder capacity can be calculated as.

F = kVA (8-35)
 Therefore the annual benefits due to the released feeder capacity can be calculated as.

F = F x CF x iF (8-36)

where F = annual benefits due to released feeder capacity, $/yr

F = released feeder capacity, kVA
CF = cost of installed feeder, $/kVA
iF = annual fixed charge rate applicable to feeder

8-6-7 Financial Benefits Due to Voltage Improvement

The revenues to the utility are increased as a result of increased kilowatthour energy
consumption due to the voltage rise prodused on a system by the addition of the corrective
capacitor banks. This is especially true for residential feeders. The increased energy consumption
depends on the nature of the apparatus used. For example, energy consumption for lighting
increases as the square of the voltage. As an Example, Table 8-2 gives the additional
kilowatthour energy increase (in percent) as a function of the ratio of the a verage voltage after
the addition of capacitors to the a verage voltage before the addition of capacitors (based on a
typical load diversity).
Thus the increase in revenues due to the increased kilowatthour energy consumption can
be calculated as.

BEC = BEC x BEC x EC (8-37)

where BEC = additional annual revenue due to increased kWh energy consumption, $/yr
BEC = additional k Wh energy consumption increase, %
BEC = original (or base) annual k Wh energy consumption, k Wh/yr

8-6-8 Total Financial Benefits Due Capacitor Installations

Therefore the total benefits due to the installation of capacitor banks can be summarized as.

∑ S= G + r + S + F + ACE + BCE (8-38)

Demand Energy Revenue

reduction reduction increase

Table 8-2

V av after
V av before k wh increase

1.00 0
1.05 8
1.10 16
1.15 25
1.20 34
1.25 43
1.30 52