Of the power converted to useful work, only a part is used as real power and rest as reactive power. Engineers express real power in W (Watts) and reactive power as VAR (Volt-Amperes-Reactive). The appliance converts the real power into actual work, while it needs the reactive power to sustain a magnetic field and this does not directly contribute to the actual work done by the appliance. Therefore, the real power is also called the working power, while the reactive power is called non-working power. The sum total of the working and non-working power of an appliance is called its apparent power, expressed as VA (Volt-Amperes) and is the product of the nominal operating voltage and the current consumed by the appliance when operating.
This phenomenon of reactive power is true mostly for inductive appliances such as motors, compressors or ballasts. Power Factor is the ratio of the real or working power to the apparent power – an indication of how effectively the appliance will be using electricity. The problem is, although you will be paying the electricity utility for the entire apparent power consumed, the appliance will be converting only the real power into useful work for you. Therefore, a higher PF rating for your appliance works to your advantage – choose one with PF as close to 1.0 as possible.
In reality, low PF is also a headache for the utility supplying you with power. This is best explained with an example. Let us assume you have an operation that requires 100KW to run properly. If you install a machine that has a PF of 0.8, it will chalk up 125VA on the Apparent Power meter, but will convert only 80% of its incoming power into useful work. Since the electricity utility will have to supply both active and reactive power to its consumers, the wasted power ends up heating the conductors of the distribution system, resulting in a voltage drop at the consumers end.