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Load factor of two consumers

Short answer

Load factor = average load / maximum demand = energy/(max demand × hours). For A: 100 kWh/(20 kW×24 h) = 0.208; for B: 100 kWh/(5 kW×24 h) = 0.833. High load factor (B) means lower fixed cost per kWh for utility and lower demand charge for consumer, even with same energy use.

Define Load Factor. Consumer A has a load of 20 kW for 5 hrs and Consumer B has a load of 5 kW for 20 hrs. Find the load factor for both consumers and explain the significance of the load factor based on energy expenditure and utility point of view.

Load factor is the ratio of the average load to the maximum demand over a given period (day, month or year):

Load factor = Average load / Maximum demand
            = Energy consumed / (Max demand × hours)

It is always ≤ 1 and shows how evenly the load is used.

Calculation (period = 1 day = 24 h)

Each consumer's maximum demand is its constant load.

Consumer A:
 Energy  = 20 kW × 5 h       = 100 kWh
 Avg load = 100 / 24         = 4.167 kW
 LF(A)   = 4.167 / 20        = 0.2083

Consumer B:
 Energy  = 5 kW × 20 h       = 100 kWh
 Avg load = 100 / 24         = 4.167 kW
 LF(B)   = 4.167 / 5         = 0.8333

Answer: Load factor of A = 0.208 (20.8%); load factor of B = 0.833 (83.3%).

Significance

Both consumers use the same energy, 100 kWh per day, but:

  • Utility point of view: to supply A, the utility must keep 20 kW of generation, transformer and line capacity ready, which is used only 5 hours a day. For B only 5 kW of capacity is needed and it is used 20 hours. The fixed cost of plant per kWh sold is four times larger for A. So a high load factor (B) is better for the utility: plant is used well, cost per unit falls.
  • Energy expenditure (consumer) point of view: under a two-part tariff (demand charge per kW + energy charge per kWh), A pays the same energy charge as B but four times the demand charge (20 kW vs 5 kW). A's cost per kWh is therefore higher. Improving load factor by spreading loads over time lowers the electricity bill.
  • That is why utilities give lower rates to high load factor consumers and encourage off-peak use.

✓ Answer checked by Claude Opus 5.5 (high effort)

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