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When the need arises to correct a poor power factor in an AC power system, you probably do not have the luxury of knowing the exact inductance of the load on henrys to use in your calculations. You may be fortunate enough to have an instrument called a power factor meter to tell you what power factor (a number between 0 and 1) and apparent power (which can be calculated by taking a voltmeter in volts and multiplying it by a reading of ammeter in amperes). Under less favorable circumstances, you may need to use an oscilloscope to compare voltage and current waveforms, measure phase shift in degrees, and calculate the power factor for the cosine of that phase change.

You will most likely have access to a wattmeter to measure true power, which can be compared to an apparent power calculation (from multiplying the total voltage and total current measurements). From the true and apparent power values, you can determine the reactive power and the power factor.

In electrical engineering, the power factor of an AC electric power system is defined as the ratio of the actual power flowing to the load to the apparent power in the circuit, and is a dimensionless number in the closed interval of -1 to 1. The power factor of less than one means that the voltage and current waveforms are not in phase, which reduces the instantaneous product of the two waveforms (V × I). The real power is the ability of the circuit to perform a job at a given time. The apparent power is the product of the current and voltage of the circuit. Due to the energy stored in the load and returned to the source, or due to a non-linear load that distorts the waveform of the current drawn from the source, the apparent power will be greater than the actual power. A negative power factor occurs when the device (which is normally the load) generates energy, which then flows into the source, which is normally considered the generator.

In an electric power system, a load with a low power factor consumes more current than a load with a high power factor for the same amount of useful power transferred. Higher currents increase power loss in the distribution system and require larger cables and other equipment. Due to the costs of larger equipment and energy wastage, electrical services will generally charge a higher cost to industrial or commercial customers who have a low power factor.

Linear loads with low power factor (such as induction motors) can be corrected with a passive network of capacitors or inductors. Non-linear loads, such as rectifiers, distort the current consumed by the system. In such cases, the active or passive power factor correction may be used to counteract the distortion and raise the power factor. Devices for power factor correction may be in a central substation, distributed in a distribution system or integrated into energy-consuming equipment.