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MV vs LV supply tariff for a 2-shift factory

Short answer

For 1,140,000 kWh and 375 kVA maximum demand, LV supply costs Rs 17,745,000. MV supply, including 5% transformer losses, costs Rs 20,584,145. Difference is Rs 2,839,145 per year, so LV is cheaper.

A factory works for 2 shift (8 hours per shift) a day for 285 days in a year. The following two system of tariff are available. (i) Medium voltage supply at Rs 12 per unit plus Rs 1300 per month per kVA of maximum demand. (ii) Low voltage supply at Rs.650 per month per kVA of maximum demand plus Rs.13 per unit. The factory has an average load of 250 kW at 0.8 power factor and a maximum demand of 300 kW at the same power factor. The high voltage equipment costs Rs. 700 per kVA and losses can be taken as 5%. Interest and depreciation charges are 10%. Calculate the difference in the annual cost between the two systems.

Data: working hours = 2 × 8 × 285 = 4560 h/year; average load 250 kW; maximum demand 300 kW at 0.8 pf.

Energy used=250×4560=1,140,000 kWhMax demand=3000.8=375 kVA\begin{aligned} \text{Energy used} &= 250 \times 4560 = 1{,}140{,}000\ \text{kWh} \\ \text{Max demand} &= \frac{300}{0.8} = 375\ \text{kVA} \end{aligned}

Low voltage supply

Demand charge=650×12×375=Rs 2,925,000Energy charge=13×1,140,000=Rs 14,820,000Total=Rs 17,745,000\begin{aligned} \text{Demand charge} &= 650 \times 12 \times 375 = \text{Rs } 2{,}925{,}000 \\ \text{Energy charge} &= 13 \times 1{,}140{,}000 = \text{Rs } 14{,}820{,}000 \\ \text{Total} &= \text{Rs } 17{,}745{,}000 \end{aligned}

Medium voltage supply

The consumer installs the transformer and switchgear (rated for the 375 kVA demand); their 5% losses are metered on the MV side.

Max demand on MV side=3750.95=394.74 kVAEnergy on MV side=1,140,0000.95=1,200,000 kWhDemand charge=1300×12×394.74=Rs 6,157,895Energy charge=12×1,200,000=Rs 14,400,000Equipment cost=700×375=Rs 262,500Interest and depreciation=0.10×262,500=Rs 26,250Total=Rs 20,584,145\begin{aligned} \text{Max demand on MV side} &= \frac{375}{0.95} = 394.74\ \text{kVA} \\ \text{Energy on MV side} &= \frac{1{,}140{,}000}{0.95} = 1{,}200{,}000\ \text{kWh} \\ \text{Demand charge} &= 1300 \times 12 \times 394.74 = \text{Rs } 6{,}157{,}895 \\ \text{Energy charge} &= 12 \times 1{,}200{,}000 = \text{Rs } 14{,}400{,}000 \\ \text{Equipment cost} &= 700 \times 375 = \text{Rs } 262{,}500 \\ \text{Interest and depreciation} &= 0.10 \times 262{,}500 = \text{Rs } 26{,}250 \\ \text{Total} &= \text{Rs } 20{,}584{,}145 \end{aligned}
SystemAnnual cost (Rs)
Low voltage17,745,000
Medium voltage20,584,145

The MV demand charge (Rs 1300/kVA/month) is double the LV one, so it outweighs the Re 1/unit lower energy rate.

Answer: Difference in annual cost = Rs 2,839,145 (about Rs 28.4 lakh); the low voltage supply is cheaper.

✓ Answer checked by Claude Opus 5.5 (high effort)

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