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Why is the power factor important in electrical systems?

What is power factor in AC systems?
Electrical power is the energy that can be transferred to any other form in unit time. In AC systems, the power factor of an electrical system is basically a factor of its efficiency. If an equipment is said to have 0.9 power factor, it simply implies that it is 90% efficient.  

The efficiency of any equipment is calculated in terms of its output and input. 

 A factor of its efficiency/power = output/input


Likewise in the electrical domain, power factor is the ratio between real power and apparent power of an electrical system. It has values in the range from 0 to 1.


Power factor = active power/apparent power =cos Ø,
 where Ø is the phase angle between voltage and current.
Fig 1. Phasor diagram



Lagging power factor: - When the voltage lags the current, generators in the industry inject reactive power. Here the power factor is said to be lagging. The inductive loads like coils, motors etc. are having lagging power factors.

Leading power factor: - When the voltage leads the current, generators are likely to absorb reactive power, therefore, the power factor is said to be leading. Capacitive loads have leading power factors.

Unity power factor: - When the power factor is unity, the current and voltage will be having the same phase. Resistive loads have unity power factor.

Importance of power factor
As told before the maximum value of power factor is 1. "Unity power factor" is the goal of any electrical industrial facility. If the power factor is falling below 1, they are needed to supply more current to the consumer or should be able to provide equipment with more efficiency. Line losses are likely to occur in doing so. Also, the company will be charged with a penalty if its power factor is falling below the tolerable value.
Figure 1. Surface capacitor banks for power factor correction

All the power systems will be having resistors, inductors, and capacitors. So the power factor will not be unity(or at it tolerable value). Most of the industries are provided with induction motors with motor winding acting as inductors. Transformers, induction motors, induction generators, high-intensity discharge lighting etc. are the various inductive loads in power system. So the power factor is likely to lag behind. Here capacitors can be used to compensate the lagging power factor. For the power factor correction, industries are compulsorily having capacitor banks. 

So by the addition of necessary capacitors and inductors in the power systems to neglect the effect of inductance and capacitance respectively can lead to the power factor correction. This correction in power factor is either by absorbing or supplying reactive power. Inductors aid in consuming reactive power and capacitors can generate reactive power. Thus by the regulation in reactive power, the energy transfer between the load and utility generator is reduced. This helps in overall cost reduction for the utility boards. This reduction in utility charges also reduces the peak kW billing demand and also alleviates the power factor penalty. It can also increase the system capacity and also reduces the losses in our electrical system.