What is power factor correction in electrical system?

Power factor correction means managing the reactive power component in electrical system. Usually by any correction, it is meant of removal or suppression.  However, by power factor correction it does not mean anything related to removal or suppression of reactive component of electrical power.

We need reactive power for power transformers and other equipment that works by the principle of using magnetic force. 

Power factor correction means - generation of reactive power at the load point. Thus relief the source (usually generator) to supply reactive power to the load side.

So a reactive power generator is installed at the consumer end or load side. It generates the necessary reactive power. The generation unit does not to generate reactive power and then transmission to the consumer end.  This is called overall “Power Factor Correction”.

Thus, the net reactive power component in electrical system is remain same but the source of it shifts from the generation side to the consumer side. 

                                                          Fig Power factor correction

The usual reactive power generator installed at the load side/ consumer location is Capacitor. A combination of capacitors is called “Capacitor Bank”. Moreover, this electrical panel is usually named as “PFI Panel” – Power Factor Improvement panel.

                                                    Fig: Power factor correction - Simplified