Power Factor  is the existing relation between the true power (P) or real average power and the apparent power (S) or the complex power [Ref.3, ch.3].
As the power factor drops the system becomes less efficient. A drop from 1.0 to 0.9 results in 15% more current being required for the same load.
A power factor of 0.7 requires approximately 43% more current; and a power factor of 0.5 requires approximately 100% more current.
The objective, therefore, should be to reduce the reactive power drawn from the supply by improving the power factor.
If an AC motor were 100% efficient, it would consume only active power but, since most
motors are only 75% to 80% efficient, they operate at a low power factor. This means poor energy and cost efficiency because the Electricity Companies charge you at penalty rates for poor power factor.
In this section we are going to see different aspects related with the reactive Power.
The loads on an electrical distribution system are classified into the following three groups: resistive, inductive or capacitive.
In a general plant, the most common is likely to be inductive due to the lighting, transformers, relays and AC induction motors. All inductive loads require two kinds of power to operate:
Reactive power “ used to energize the magnetic field Reactive Power. It is a result of Reactance in an AC circuit.
The amount of Reactive Power is equal to the square root of the Apparent Power (voltage multiplied by amps) squared minus the True power (Watts) squared.
The reactive power is expressed in VARs or Volt Amps Reactive. 
Active power – used to produce the motive force. It is the Power consumed, used or dissipated. Referred to as the True Power. In other words, Watts of a circuit that can be found by multiplying the Resistance in Ohms by the Current I in amps squared, or by multiplying the Voltage by the Current or by dividing the square of the Voltage by the Resistance. 
The operating power from the distribution system is composed of both, the active power and the reactive power. The reactive power only provides the magnetic field whereas the active power does useful work in driving the motor.
The figure 2.1 shows a phasor diagram. Therefore, reactive power is the vector sum of the current and the voltage.
The apparent power is expressed by volt-amperes (VA) as shows below .
The proposal of this project is to analyse the problem of the unnecessary consumption of the active power for an electrical industrial installation.
Creating a scale prototype that could be used for laboratory demonstrations on power factor control proposes.
Loads, transformers, lines, motors, etc absorb power that is actually more reactive. Consequently, more harmonics are generated.
Consumers of electricity have to be aware of this fact and to know that this causes higher voltage drops and conductive power losses.
A bad electrical industrial installation for the consumer will use more active power than reactive. Therefore, the power factor (cos O) will be smaller than one. For this reason the consumer A, is probably paying for and consuming more electricity than consumer B whose power factor (cos O) is around one. (Optimal power factor) [Ref.3, ch.3]
Different technologies can be used to achieve this:
The insertion of capacitor banks which will generate a reactive power proportional to the voltage and the capacity.
The use of Static Var Compensators where they are connected or disconnected from the network using thyristors acting as electronic switches. The voltage is in phase with the network voltage and the reactive generation is controlled by regulating the amplitude of the source.
The use of AC Static Switches, which will activate or deactivate capacitors depending on the inductance load. This means between a regulator that will try to maintain (cosO= 1). (See Figure 1.1) using Static Var Compensators.
Thus, a technique to generate the reactive power has been found.