With an Inductive Load such as a Motor, there is both Resistive load and Inductive Load. . . . The Resistive load is largely from the Mechanical Work being done, so can vary. . . . The Inductive Load creates the Magnetic field and does not significantly change, regardless of the Mechanical Load on the Motor.
When this Resistance & Inductive Load is put on to the Generator, it is only the Real or Resistive Load part, that is the kW part, that the Engine sees, so there is no change in the Engine Fuel, if only the 90° Inductive component changes. . . . But the Current changes, should the Inductive component change. . . . This increased Current through the Alternator, will result in some small amount of I²R voltage drop in the Alternator Windings, so the AVR will adjust the Excitation, to maintain output Voltage across the Alternator terminals.
It is better NOT to use power factor correction Capacitors near Motors, when they are being powered from a local Generator. . . . It serves no purpose, and could cause a problem with the AVR, when the Motor is switched off and the Capacitor still on the line.
There are 3 reasons for fitting power factor correction Capacitors..
1.) Poor Power Factor may cause the Local Utility Supplier to charge you a higher cost for such Electricity. . . .This is usually the biggest and perhaps the only reason for installing power factor correction.
2.) If you have very long power cables between your Generator and Motors, then the higher Current due to kVAr might cause too much voltage drop on those long wires, or require you to install larger cables than you could get away with, if the power factor was good.
3.) If your site Load is close to the Maximum kVA of your Generators Alternator, then fitting Power Factor Capacitors, would then allow a little bit more from that Alternator. . . . . But if your poor power factor Motors are not causing overload on your Alternators kVA rating, then it is not worth fitting any Capacitors, which could actual cause some problems.