As a one liner, it can be said that the Shunt Capacitor banks (used with series reactors) serves the purpose of 'power factor correction'.

What is Power Factor:

When asked what is Power Factor (hereafter PF), the most likely answer that one would get in mind is Cos Φ.
 
Any equipment handles a job with some degree of efficiency. The quantification of this efficiency is termed to be "Power Factor". Equipment like induction motors, Transformers etc. require two types of power. One of them is the power required to perform the useful work which is called as the Real Power, measured in kW. The second type of power is the one that is required to produce the magnetic flux which is termed as Magnetizing Power or the Reactive Power, measured in kVAR. The vectorial summation of Real and Reactive Power is termed as the Apparent Power, measured in kVA. 

The PF is defined as the ratio of the Real Power to the Apparent Power. Hence, it can be inferred that, more the reactive power which results in higher values of apparent power, the PF is low. Similarly, for a system with lower reactive power results in the PF being closer to unity.

Thus, for a system to be efficient, the value of PF has to be as close to unity as possible.


Reasons for a low PF:

As mentioned earlier, the PF can be manipulated by the reactive power. The requirement of reactive power gets higher with the use of Inductive loads. Some of the examples of Inductive loads are, Transformers, Induction Motors, Relays, Reactors etc.   


For instance, the transformers requires kVAR (reactive power) for producing the magnetic flux. This eventually increases the apparent power and hence a drop in PF

Benefits of Improved Power Factor:

An improved PF; i.e a PF value closer to unity will have the following benefits:

1. Reduction in Power bills:
An increase in the reactive power causes an increase in the apparent power. The power that the state electricity board supplies is the apparent power. 

So, lower the PF, lower will be the value of apparent power. Hence the power consumed is lower. This equals reduction in the power bills.

Apart from this, state electricity board charges the user with a penalty if the system runs with a lower PF.

2. Improved System capacity and Voltage level:
By improving the PF of the system, kW capacity of the system is also increased. Apart form this, a lower PF would result in power system losses in the distribution system. As power losses increase, it would result in voltage drops. Excessive voltage drop would result in premature failure of motors, overheating of cables etc.
 

Improving Power Factor:

1. Capacitive load in the system:
The PF is directly manipulated by the inductive loads. The inductive loads and the capacitive loads acts opposite to each other. By adding a capacitive load equivalent to the inductive load will reduce the magnitude of the reactive power and hence PF can be improved. The PF of the system is constantly changing due to the variations in the number and size of the inductive load (i.e. the number and size active transformers and/or induction motors) connected to the system varies. And hence, it is difficult to balance the inductive and capacitive loads continuously. 

In addition to this, the capacitive load that is being added has to be designed for specific requirement of the system, else it would result in harmonic problems.


2. Proper use of the Equipment:
The low PF is caused by the presence of Induction motors and other inductive loads. But, more specifically low PF is caused by running the induction motors with light load.  Any equipment should be operated only at its rated voltage and not above it. Even with energy efficient motors, the PF is affected with variations in load. Hence, it is advisable to replace the worn out equipment with energy efficient ones.


Shunt Capacitor Banks for PF Correction:

The most common and cheapest method for Power Factor Correction is by the use of Shunt Capacitor Banks or Capacitor units in the system. There are two times of Capacitor banks viz. Fixed Capacitor Banks and Variable Capacitor Banks.

The former method has a fixed capacitor units connected to the transformer or the switch-gear bus. The capacitors store the kVAR and release energy opposing the reactive energy caused by the inductor. The fixed capacitor bank system is sized to regulate 0.9 PF during maximum operational inductive load. This means that during the periods of operation when less than maximum inductive load is utilised, extra kVAR is fed into the system. This is one of the major draw backs of having a fixed capacitor bank unit. This system does not consider the future expansion of the loads in the system.

The latter method involves a use of variable capacitor units. This is similar to the fixed capacitor bank but the bank monitors the systems PF and varies the capacitive load to be connected automatically. The variable capacitor banks comes with internal protection. The drawback of this type of capacitor bank is that it is more likely to have harmonics problems because of the switching of capacitors.


The capacitor banks will be having a series reactor connected to it. The reactor has nothing but a wound coil of high impedance. The reactors are used in series with the capacitor units to limit the sudden inrush of starting current at the time of switching in the capacitor unit. These are also called as current-limiting reactor.