Only real power (kW) does useful work — turning motors, producing heat and light. Inductive
equipment like motors and transformers also draws reactive power (kVAR), needed to build magnetic
fields but returned to the supply every cycle rather than consumed. The supply still has to carry both, so
the actual current flowing is set by the apparent power (kVA) — the hypotenuse of a right triangle
with real and reactive power as its two legs. Power factor is simply PF = P/S = cos φ, and it's
always somewhere between 0 (all reactive, no useful work) and 1 (perfectly efficient, no phase shift at all).
A 100 kW load running at 0.80 PF draws 125 kVA from the supply and 75 kVAR of that never does any work. Correcting to 0.95 — the UK DNO reactive-charge threshold — needs 42.1 kVAR of capacitance, and drops the current draw by roughly 26% for the exact same 100 kW of real work.
Every DNO in the UK builds its network around a design power factor of 0.95. A site running well below that forces more current down the same cables to deliver the same useful power, which is exactly why UK Power Networks' own connection terms require no less than 0.95 PF, and why most DNOs apply reactive-power charges below that threshold.
A capacitor's reactive power is the mathematical opposite of an inductor's — it leads instead of lags. Placed in parallel with an inductive load, it supplies the load's reactive power locally instead of drawing it from the supply, which is what shrinks the current the cable actually has to carry.
Yes — too much capacitance flips the phase the other way, giving a leading power factor, which some DNOs also penalise. Automatic capacitor banks switch stages on and off precisely to avoid overshooting past unity as the load changes through the day.
Not directly — UK domestic and small commercial supplies are billed on kWh alone. Reactive-power charges apply specifically to non-domestic sites with half-hourly metering, which is why this mostly matters for industrial and larger commercial premises.