Chapter A General rules of electrical installation design

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L
L - Power factor correction and
harmonic filtering
(1) Since other benefits are obtained from a high value of
power factor, as previously noted.
2 Why to improve the power
factor?
Reduction of losses (P, kW) in cables
Losses in cables are proportional to the current squared, and are measured by the
kWh meter of the installation. Reduction of the total current in a conductor by 10% for
example, will reduce the losses by almost 20%.
Reduction of voltage drop
Power factor correction capacitors reduce or even cancel completely the (inductive)
reactive current in upstream conductors, thereby reducing or eliminating voltage
drops.
Note: Over compensation will produce a voltage rise at the capacitor level.
Increase in available power
By improving the power factor of a load supplied from a transformer, the current
through the transformer will be reduced, thereby allowing more load to be added. In
practice, it may be less expensive to improve the power factor (1) , than to replace the
transformer by a larger unit.
This matter is further elaborated in clause 6.
Schneider Electric - Electrical installation guide 2008