Assume a pure inductive load connected across an AC power supply, we will see that, the power wave has double frequency that of the voltage wave that produced it. In other words we can see that, by the time voltage wave completes one half cycle, the power wave would have completed one complete cycle. By definition, this power is called the reactive power.

We can see that, this power (reactive) consumed by the inductor is zero in any half cycle of voltage wave. Physically speaking, the power is absorbed in inductor in one quarter cycle and gives back to the power supply in the other quarter cycle of the voltage wave Now what is the effect of this power exchange? We are unable to use the Source (generator) as this power exchange is associated with current flow. If the value inductive load is such that, it draws full load current from the Source, we can not load it further for any useful purpose. The useful purpose is the power transferred to any resistors connected in the circuit. The reason why we are unable to use the real power is because of the power waves to and from the inductor.

Now if we can cancel this power flow (called reactive power) by some means, then we can load the source more and more. If we completely cancel this reactive power flow, then we can make use of the source power to the actual load. Now capacitor is another component which behaves exactly in the same way as that of the inductor with power wave double that of the supply frequency but with a slight difference. The power wave flow is opposite in direction as that of the inductor power flow so that it cancels the reactive power flow produced by the inductor.

Now we can term that in one quarter cycle, the inductor consumes the reactive power and in the same quarter cycle the capacitor gives back the reactive power. Naturally, the inductor can be considered as consuming the reactive power from the power source and the capacitor give back (or produces) at the same time. By properly selecting the value of the capacitor we can give back the same quantity of power to the source that consumed by the inductor at the same period. In the next quarter cycle, the capacitor consumes the reactive power whereas the inductor gives back to the power source. Hence, the term consumption and production are only a general classification of notation in power system.

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