Power factor indicates the ratio of real power (Watts used by the load) to apparent power (voltage x current drawn into the circuit). A low power factor therefore indicates an inefficient product as it draws more current into the circuit than is utilised by the load. The more current in the transmission lines leads to more power loss in the form of heat and therefore wasted energy seen by your electricity distributor.
Residential homes are billed for power according to wattage (real power), meaning that two LED products with the same wattage but different power factors will have identical energy costs to the home owner. The use of products with low power factors however, negatively impacts the environment by increasing overall energy consumption and therefore greenhouse gas emissions even if the user is not aware of it. LED lighting products are intended as a green technology but this is not the case if they do not possess a high power factor that complies with green energy standards. The US Department of Energy's Energy Star Program mandates that power factor must be better than 0.7 for domestic applications for LED drivers¹.
In addition to choosing LED products that genuinely represent green technology, selecting LED lights with higher power factors minimises the current capacity requirements of components in your lighting circuits including dimmers and cables as the product is not drawing an excessive amount of current compared to what is required. Conversely, the lower the current draws (and therefore the higher the power factor) of the LED drivers used, the more LED lights that can be supplied by the one circuit. Due to the already very low current draws of LED lights however, these considerations are less likely to be issues in simple domestic installations.
ENERGY STAR Program Requirements for Integral LED Lamps
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