Power factor is a measure of how efficiently an AC (alternating current) power system uses the supplied power. It is defined as the ratio of real power (P) to apparent power (S), where the real power is the power that performs useful work in the load, and apparent power is the product of voltage (V) and current(I) in the. Power factor correction is the process of improving the power factor of a system by adding or removing reactive power sources, such as capacitor. A capacitor bank works by providing or absorbing reactive power to or from the system, depending on its connection mode and location. There are. Capacitor banks are useful devices that can store electrical energy and condition the flow of that energy in an electric power system. They can improve the power factor, voltage regulation, system efficiency, capacity,. The size of a capacitor bank depends on several factors, such as: 1. The desired power factor improvement or reactive power compensation 2.