Stop Paying Fines: The 2026 Guide to SEC Power Factor Penalties
Stop Paying Fines: The 2026 Guide to SEC Power Factor Penalties
Imagine opening your monthly electricity bill from the Saudi Electricity Company (SEC) and seeing a charge that shouldn't be there. You’ve done everything right—you’ve switched to LED lights, you’re monitoring your AC usage—but the bill is still sky-high. If you manage a factory in Riyadh’s Second Industrial City or run a commercial complex in Jeddah, chances are you are paying for "Reactive Power" without even knowing it.
I’ve visited countless industrial sites across the Kingdom where facility managers are paying thousands of Riyals in fines every month simply because their Power Factor (PF) is too low. The good news? This is one of the easiest problems to fix. At Volt Solutions, we specialize in identifying these leaks and plugging them, often with a Return on Investment (ROI) of less than 12 months.
In this guide, I’ll explain exactly what the SEC Power Factor penalty is, why it’s happening to your facility, and how you can stop paying it immediately.
What is the SEC Power Factor Penalty?
The Saudi Electricity Company (SEC) mandates that all commercial and industrial facilities maintain a Power Factor of 0.95 or higher. If your Power Factor drops below this threshold, you are hit with a penalty.
The Rule: If your Power Factor < 0.95, you pay a penalty on your consumption bill. The lower the number, the higher the fine.
Think of it like a glass of soda. The liquid is the "Real Power" (kW) that actually runs your machines. The foam on top is the "Reactive Power" (kVAR). You need a little bit of foam to keep the drink fresh (magnetic fields for motors), but if your glass is 50% foam, you are wasting space. The SEC charges you for that excess foam because it clogs up their transmission lines.
Why Is My Power Factor Low?
In Saudi Arabia, our harsh climate is a major contributor. During the summer, when temperatures in Dammam or Riyadh hit 45°C+, your cooling systems work overtime. Most of the equipment causing low power factor are inductive loads, which are common in KSA industries:
Heavy HVAC Systems
Large chillers and compressors used in malls and hospitals are massive consumers of reactive power.
Industrial Motors
Factories using conveyor belts, pumps, or mixers often run motors at partial load, which ruins power factor.
Old Transformers
Aging infrastructure in older industrial cities often suffers from poor efficiency leaks.
If you see your bills spiking in July and August specifically, it's highly likely your Power Factor is dropping as your AC load increases.
The Solution: Capacitor Banks
The fix is surprisingly straightforward: Power Factor Correction (PFC). This usually involves installing a Capacitor Bank at your main distribution panel.
A Capacitor Bank acts like a battery for Reactive Power. Instead of drawing that "foam" from the SEC grid (and paying for it), the capacitor bank provides it locally. Your utility meter slows down, the penalty disappears, and your internal electrical system runs cooler and more efficiently.
Does it really work?
Yes. Installing a properly sized Capacitor Bank is one of the few engineering upgrades that pays for itself in cash. We often see payback periods of 6 to 12 months. After that, the savings go straight to your bottom line.
Case Study: Plastic Factory in Dammam
Saving SAR 60,000 Per Year
A plastic injection molding factory in Dammam's First Industrial City contacted us. They were confused by a recurring "Reactive Energy Charge" on their bill.
The Diagnosis:
We conducted a Power Quality Investigation and found their Power Factor was hovering around 0.82—well below the 0.95 limit.
The Fix:
Volt Solutions designed and commissioned an automatic Capacitor Bank panel tailored to their specific load profile.
The Result:
- Power Factor improved to 0.98 immediately.
- SEC Penalty dropped to Zero (0).
- Monthly savings: Approx. SAR 5,000.
- Annual savings: SAR 60,000.
This isn't magic; it's physics. And it’s fully compliant with SEC regulations.
How to Stop Paying Fines Today
If you suspect you are paying penalties, don't wait. Every month is lost money. Here is your action plan:
1. Check Your Bill
Look for lines mentioning "kVARh" or "Power Factor Penalty."
2. Request an Audit
Contact us for a site visit. We connect our analyzers to read your actual load.
3. Install & Save
We install the correction unit, and you see the difference in the very next bill.
Our team at Volt Solutions covers the entire Kingdom, from our HQ in Al-Khobar to Riyadh, Jeddah, and Yanbu. We know the local grid codes inside and out.
Frequently Asked Questions
Absolutely. In fact, the Saudi Electricity Company (SEC) encourages it. They penalize you for low power factor specifically to motivate you to install correction equipment, as it helps stabilize the national grid.
Typically, no. The SEC penalty usually applies to commercial and industrial meters with loads higher than residential limits. However, if you have a large compound or palace with a commercial meter, it might apply. Check your bill for "kVAR" charges.
It depends on the size of your facility (measured in kVAR needed). However, the cost is almost always recovered within the first year of savings from eliminated penalties.
