Use of Capacitor in Technical Loss Reduction
The use of capacitors to correct for poor power factor is a well-built and cost-effective means of reducing distribution system losses and maximizing the revenue. Capacitor banks could be placed close to the low power factor loads, and other appropriate locations for maximizing the system advantages in terms of releasing system capacity, controlling voltage and minimizing system losses. The capacitors should be a combination of switched and fixed kinds to avoid overcompensation. In certain States, the Regulatory Commissions have introduced kVAh tariffs to protect the interest of the distribution utilities and penalize for the poor power factors.
In most LT distribution circuits, it is found in which the Power Factor (PF) ranges from 0.65 to 0.75. Here you will learn that a low PF contributes towards high distribution losses. For low power factor the amount of current drawn raise to meet the similar kilowatt demand of the load. Therefore low power factor results in higher currents by the system. Higher line currents result in higher losses because of the inherent resistance in the distribution lines.