Unity or in nearer to unity power factor is one of the most desirable for a consumer in order to minimize penalties in order to minimize penalties for low power factor.
Due to poor power factor, size and cost of generating plant and distributions equipment increases.
Electrical supply utility charges a fixed amount on KVA demand.
For the same KW demand, if the power factor is improved, KVA demand also decreases.
Due to a decrease in KVA demand, the consumer has to pay less.
But, in doing so, consumers have to pay more for the power factor correcting devices.
Hence, it is very important to find out the optimum positions.
Traditionally, power factor corrections have been done with synchronous condensers which is nothing but externally-excited motors whose excitation determines whether they absorb or supply reactive power to the system.