The aim of power factor correction (PFC)

Many people overlook the benefits that power factor
correction can offer the typical home in comparison to the savings and other
benefits that businesses with large inductive loads can expect. Most
importantly, electricity consumers pay for reactive power in the form of energy
losses created by the reactive current flowing in their homes. These losses are
in the form of heat and cannot be returned to the grid. Hence they pay.

The fewer kilowatts expended in their homes,
whether from heat dissipation or not, the lower the electric bill. Since power
factor correction reduces the energy losses, consumers save. As stated earlier,
electric companies correct for power factor around industrial complexes, or
they will request the offending customer to do so, or they will charge for
reactive power. They
are not worried about residential
service because the impact on their distribution grid is not as severe as in
heavily industrialized areas. However, it is true that power factor correction
assists the electric company by reducing demand for electricity, thereby
allowing them to satisfy service needs elsewhere. But who cares? Power factor
correction lowers electric bill by reducing the number of kilowatts expended,
and without it electric bill will be very exorbitant
In the most cases, PFC is used for economic reasons
(Trehan, 2011). Using compensating device, one can save on electricity bill as
well as keep certain grid parameters determined by the energy provider. Power
factor correction gives even more profits, than only savings. Compensating
“unnecessary” reactive power the current carrying capacity of an existing
network can be sufficient to send more active power through it, maintaining the
same ratings of the apparatus within the supplying and distribution system. PFC
also allows to decrease transmission losses and limits voltage drops.
Generally, reliability of the network gets better.
But one should be aware, that compensating device connected to the mains can
also have negative consequences like:
i.           
Transient generation
ii.           
Higher order harmonics generation
iii.           
Long lasting voltage rise
iv.           
Gain of higher order harmonics
v.           
Voltage drops, outages and
Overvoltage of short duration
vi.           
Other kind of distortions
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