__Effect of harmonics on Power Factor__- It is defined as the ratio of active power ( kW ) and apparent power ( kVA ).

Power Factor =
kW / kVA

__Displacement Factor ( Displacement Power Factor )__- It is defined as the Cosine of angle between voltage vector and current vector at the fundamental frequency.

Displacement
Factor = P / V

_{1}I_{1}

__Distortion Factor ( Distortion Power Factor )__- The power factor in which effect of harmonic of the system is considered is called as distortion power factor.
- It is ratio of fundamental RMS current to the RMS current of the total current.

Distortion
Factor = I

_{1}/ I
= 1 / √ ( 1 + THD

^{2})
Where I

_{1}= Fundamental current- Higher the value of total harmonic distortion, lower the distortion power factor

__True Power Factor__- It is defined as the ratio of average power to the apparent power.

True power
factor = P / V

_{RMS}I_{RMS}
= Displacement Factor
× Distortion Factor

__Capacitor banks__- The improvement of the power factor is done by capacitor bank and in this case improvement done in the displacement power factor.
- The voltage and current waveform are at the fundamental frequency or say at 50 Hz.

__Effect of harmonics on Power Factor__- When the system is affected by harmonics due to Non linear load, the RMS current increases.

I = I

_{1}√ ( 1 + THD^{2})- The kVA demands increases due to increase in RMS current but the kW output of the system does not change.

kVA = kW / Power
Factor

- The power factor has to decrease if the kVA demand increases with kW remain unchanged.
- This power factor decrease due to presence of harmonics.
- The true power factor remain low in spite of displacement power factor increases due to poor distortion power factor

*True power factor = Displacement Power Factor × Distortion Factor*

__Capacitor bank and Distortion power factor__- The capacitor bank do not significantly improve distortion power factor.
- It can lead to harmonic resonance and harmonic amplification when harmonic present in the system.
- The harmonic amplification is avoided by using detuned reactors.

**How to increase true power factor?**

- The true power factor is increased only if both displacement power factor and distortion power factor increases.
- The capacitor bank improves displacement power factor.
- The active harmonic filter must be used to improve distortion power factor in a system which consists of rich harmonics.
- The combination of capacitor and active harmonic filter is good combination for power factor improvement.

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