Capacitors are installed at various points on distribution systems and in certain customer facilities to help increase power factor, which is the ratio of real power (kWh) to apparent power (kVA). Inductive loads such as motors and fluorescent lights and reactive power absorption on overhead transmission and distribution lines result in power factor that is less than 1. Capacitors can be used to correct this situation. Capacitors store electrical charge or electrons and are used to improve power factor and help with voltage regulation by injecting reactive power.

Commercial and industrial customers with large inductive loads may use capacitors to get their power factor closer to 1 and thus avoid charges imposed by the distribution company. Residential customers typically don’t have power factor penalties but may still have power factor issues due to use of devices with motors such as air conditioners. On lines serving residential customers, the utility or power supplier typically compensates for the power factor drop caused by air conditioning in summer by installing capacitors near residential subdivisions. This may also be necessary on lines with significant amounts of interconnected distributed energy generation. 

Capacitor bank on distribution pole
Capacitor bank on distribution pole (photo credit: Stephen Jones)

Multiple line capacitors are often installed in capacitor banks located on a rack beneath the cross arm of the utility pole. In underground systems capacitors may be installed in a vault. Capacitors are also often installed in distribution substations. 

Capacitors on racks in a distribution substation
Capacitors on racks in a distribution substation (photo credit: Stephen Jones)