Cost efficient power quality solutions in the era of distributed energy resources

As renewables and onsite power generation sources play an ever-more central role in power generation, OEMs can empower their industrial customers with innovative, cost-effective solutions that overcome the technical hurdles of integrating Distributed Energy Resources to the grid.

The growth of microgrids and Distributed Energy Resources (DERS), such as solar panels, wind turbines, and battery storage systems, reflects a global trend toward decentralized power generation. Companies are increasingly choosing to bring power generation on-site to mitigate the risks of power outages, offset rising electricity costs, and reduce their carbon footprint. On-site power generation also allows businesses to maintain critical operations during grid disruptions, improve energy security, and participate in demand response programs to further optimize energy use. OEMs can enable their customers’ visions by providing financially friendly technologies that help them incorporate DERS into their energy strategy.

The power factor challenge

Part of the promise of DERS is the ability to inject excess power back into the grid when needed. This can help utilities meet local demand. In turn, businesses may be able to achieve financial incentives to further offset the rising costs of energy. However, due to their intermittent nature, renewables are an inherent source of grid instability.

Expressed as the ratio of real power (useful energy) to apparent power (total energy, including reactive power), power factor is a measure of how efficiently electrical power is being used. Although reactive power doesn’t perform any “real” work, it is essential for voltage control and grid stability. Furthermore, properly controlling reactive power can increase transmission capacity and help the utility optimize the use of existing transmission infrastructure.

Many electrical devices, such as induction motors and transformers, require reactive power to generate the magnetic field necessary for operation. As these electrical loads draw reactive power, they can reduce the power factor of the grid. Complicating matters, renewable sources typically produce active power but have limited ability to supply reactive power. If the business relies heavily on onsite renewables for active power, they may cause a further drop in power factor on the grid as they continue to rely on the utility for reactive power.

Not only does a drop in power factor cause grid instability and power quality issues, but it can also cause financial issues for the industrial power consumer. For example, the utility may require a Power Factor higher than 0.9 or 0.95 for a business integrating on-site power to the grid. If the power factor falls below this threshold, the utility will typically impose a penalty. In addition, a poor power factor puts the business in a weakened condition when it comes time to renegotiate contracts.

Power factor correction risks

Several technologies are available to help the business and the utility address power factor issues. For example, capacitor banks are widely used in electrical systems to control the flow of reactive power through the system. However, capacitor banks can also introduce another challenge into the system: high inrush currents as the capacitors charge rapidly from an uncharged state.

These inrush currents are more of an issue in scenarios where capacitor banks are frequently switched on and off, as in the case of a factory with variable production rates. Additionally, the intermittent nature of renewables can exacerbate the problem. Although the surge may last only a few milliseconds, it can be much higher than the equipment’s normal operating current, potentially damaging the equipment or shortening its lifespan.

Emerging technologies mitigate risks

As renewable energy systems became more prevalent, the need for a reliable capacitor switching solution at the 38 kV level emerged. A medium-voltage indoor circuit breaker—equipped with point-on-wave switching technology—was developed to meet this demand. Known as the VD4-CS, the breaker was designed to support cleaner energy applications while maintaining system stability.

By enabling capacitor bank switching without the use of pre-insertion resistors or reactors, the VD4-CS helped reduce line charging overvoltages and minimize switching transients. By reducing switching-related stress on equipment and improving power quality, these devices can help extend asset life and reduce maintenance costs. Additionally, its noise-reduction capabilities made it well-suited for indoor environments, particularly in industrial settings where acoustic considerations are important.

Digital integration further enhanced the VD4-CS’s functionality, enabling precise control and monitoring of switching operations. This not only improved performance but also supported predictive maintenance and system diagnostics—key features in modern grid infrastructure.

While the VD4-CS contributed to improved grid reliability, its operation required capacitor banks to be fully discharged before reconnection, resulting in a delay between switching cycles. To address this, a follow-up model—the VD4-CS1—was developed. This version allows switching to occur even when capacitor banks are partially charged, further minimizing transients and expanding operational flexibility, potentially reducing downtime, and improving system responsiveness while continuing to leverage digital tools for enhanced control and insight.

Improving the ROI of DERS

Improving power factor correction can enhance the performance and economic viability of distributed energy resources (DERs), particularly by helping reduce grid disturbances that may complicate rate negotiations between utilities and industrial customers. Beyond this, minimizing inrush currents eliminates the need for inrush limiting reactors, which can be beneficial in space-constrained environments.

While STATCOMs (Static Synchronous Compensators) are effective for dynamic reactive power compensation and voltage stability, they can be costly and complex to deploy, especially in medium-voltage applications. In contrast, capacitor bank switching using devices like the VD4-CS and VD4-CS1 offers a more targeted and cost-effective approach for managing reactive power in certain scenarios.

While not a replacement for STATCOMs in all cases, VD4-CS and VD4-CS1 breakers can serve as a practical alternative or complement in systems where fixed or staged reactive compensation is sufficient, offering a lower-cost solution with shorter lead times and simpler integration.

OEMs hold the power

As DERs become more feasible for a wider segment of the industrial market, OEMs have an unprecedented opportunity to help industrial customers optimize energy usage, increase resilience, and reduce costs. Challenges related to grid stability, reactive power control, and effective power factor correction can hinder the full realization of these benefits. By implementing solutions like ABB’s VD4-CS and VD4-CS1, OEMs can address complex power factor correction issues effectively while helping customers reduce costs.

See related blog post “Cost-effective short circuit current solutions.”