In electrical engineering, the power factor of an AC power system is defined as the ratio of the real power absorbed by the load to the apparent power flowing in the circuit. Real power is the average of the instantaneous product of voltage and current and represents the capacity of the electricity for performing work. Apparent power is the product of root mean square (RMS) current and voltage. Apparent power is often higher than real power because energy is cyclically accumulated in the load and returned to the source or because a non-linear load distorts the wave shape of the current. Where apparent power exceeds real power, more current is flowing in the circuit than would be required to transfer real power. Where the power factor magnitude is less than one, the voltage and current are not in phase, which reduces the average product of the two. A negative power factor occurs when the device (normally the load) generates real power, which then flows back towards the source.
In an electric power system, a load with a low power factor draws more current than a load with a high power factor for the same amount of useful power transferred. The larger currents increase the energy lost in the distribution system and require larger wires and other equipment. Because of the costs of larger equipment and wasted energy, electrical utilities will usually charge a higher cost to industrial or commercial customers with a low power factor.
