Power factor is basically the ratio of Active Power to the Total Power. 

It is the characteristic of the load of any plant. The plant load is mostly inductive because of the motors used in them. Because of this the power supply unit has to supply reactive component also along with active component which actually does the work. This reactive component increases the total power distributed by the supply system. 

This (inductive ) reactive power is compensated by the use of (capacitive) reactive power so that the total power remains less. 

This is done automatically by the Automatic Power Factor Correction Board which consists of a Power factor controller that senses the power factor and then switches ON the capacitors one by one from the capacitor bank till the desired power factor which is set on the controller is achieved. Since the load keeps on varying and so the Power factor for the load. The automatic switching ON and OFF of the Capacitor banks ensures that the set power factor is maintained for the load.

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