Electricity Cost Formula for Factories
How to calculate factory electricity cost from load, operating hours and tariff.
The Formula
Factory-Level Example
Connected load: 200 kW, demand factor: 75%, operating 8 hrs/day, 26 days/month, tariff: ₹8/kWh.
Indian Industrial Tariff Components
| Component | Basis | Typical Range |
|---|---|---|
| Energy charge | Per kWh | ₹5–10/kWh |
| Demand charge | Per kVA of max demand | ₹150–400/kVA |
| Fixed charge | Per month | ₹500–5,000/month |
| PF penalty | If PF < 0.90 | 1–2% per 0.01 drop |
Motor Electricity Cost — the Correct Formula
Nameplate HP is output power, not what the motor draws from the grid. A motor always pulls more than its rating because of efficiency losses, and less than its rating when it is not fully loaded. Both corrections matter:
A 20 HP motor at 75% load and 90% efficiency draws (20 × 0.746 × 0.75) ÷ 0.90 = 12.43 kW — not 14.92 kW, and certainly not 20.
Motor Running Cost Reference Table
Indicative figures at 8 hours/day, 26 days/month, 75% load, 90% efficiency, ₹8/kWh. Use the calculator for your own load factor, hours and tariff.
| Motor | Input kW | Units/month | Cost/month @ ₹8 |
|---|---|---|---|
| 5 HP | 3.11 kW | ~645 kWh | ₹5,160 |
| 7.5 HP | 4.66 kW | ~970 kWh | ₹7,760 |
| 10 HP | 6.22 kW | ~1,295 kWh | ₹10,360 |
| 15 HP | 9.33 kW | ~1,940 kWh | ₹15,520 |
| 20 HP | 12.43 kW | ~2,585 kWh | ₹20,680 |
| 25 HP | 15.54 kW | ~3,235 kWh | ₹25,880 |
| 50 HP | 31.08 kW | ~6,465 kWh | ₹51,720 |
| 100 HP | 62.17 kW | ~12,930 kWh | ₹1,03,440 |
For any HP, load factor or tariff not in this table, use the Motor Running Cost Calculator.
Why Your Bill Is Higher Than This Formula
The energy formula gives only the energy charge. On a commercial or industrial connection, four more things sit on top of it:
- Demand charge — billed on your highest recorded demand in the month (kVA or kW), not on units used. One 30-minute spike can set this for the whole month.
- Power factor penalty — below roughly 0.90 PF, most DISCOMs add a surcharge. See the PF penalty calculator.
- Time of Day (ToD) — peak-hour units can be billed at a higher rate, off-peak lower.
- Electricity duty and fixed charges — a state levy plus a monthly fixed amount.
This is why a plant that calculates ₹2,49,600 of energy can receive a bill noticeably higher. The formula is correct; it is just not the whole tariff.
Four Common Mistakes
- Using nameplate HP as kW drawn. Convert first (1 HP = 0.746 kW), then divide by efficiency.
- Ignoring load factor. Very few motors run at 100% load. Assuming they do overstates cost by 25–40%.
- Confusing kVA and kW. kVA = kW ÷ power factor. Demand charges are usually on kVA.
- Using connected load instead of actual demand. Not everything runs at once — apply a demand factor.
Frequently Asked Questions
What is the formula for electricity cost?
Cost = Power (kW) × Time (hours) × Tariff (₹/kWh). Multiply the load in kilowatts by the hours it runs to get units (kWh), then multiply units by your tariff per unit.
How do I calculate the electricity cost of 1 unit?
One unit is one kilowatt-hour. Its cost is simply your energy charge per kWh, which in India typically falls between ₹5 and ₹10 for industrial connections depending on state and slab.
How many units does a 10 HP motor consume per month?
About 1,295 units, running 8 hours a day for 26 days at 75% load and 90% efficiency. At ₹8 per unit that is roughly ₹10,360 per month.
Why is 1 HP not equal to 1 kW?
One horsepower equals 0.746 kilowatts. HP is a unit of mechanical output power while kW here measures electrical input, so the two are never interchangeable.
Does the electricity cost formula include demand charges?
No. The formula covers only the energy charge. Demand charges, power factor penalties, electricity duty and fixed charges are billed separately and must be added on top.
What is load factor in electricity cost calculation?
Load factor is the fraction of its rated capacity at which a motor actually operates. A motor rated 20 HP but running at 75% load has a load factor of 0.75, and draws proportionally less power.