Capacitors and transformers can create dangerous resonance conditions when capacitor banks are installed at the service entrance. Under these conditions harmonics produced by non-linear devices can be amplified many fold.
You can estimate the resonant harmonic by using the following formula:
If h is near the values of the major harmonics generated by a non-linear device (i.e., three, five, seven, eleven) then the resonance circuit will greatly increase harmonic distortion.
For example, if the plant has a 1,500 kVA transformer with 5-1/2% impedance and the short circuit rating of the utility is 48,000 kVA, then kVA(sys) would equal 17,391 kVA.
If 350 kVAR of capacitors were used to improve power factor, h would be:
Because h falls right on the 7th harmonic, these capacitors could create a harmful resonance condition if non-linear devices were present in the factory. In this case the capacitors should be applied only as harmonic filtering assemblies.
