
Since motors are basically electromagnets, the power factor is a measure of the amount of magnetizing current needed compared to the amount of work the motor performs. That is why the power factor is low for lightly loaded motors. The line current required for any given motor output varies inversely with power factor Increasing power factor reduces required line current which in turn reduces the voltage drop in power lines and transformers.
Low power factor can be an important consideration when selecting a motor for a particular application since a low power factor may increase the need for distribution system capacity, and can even result in power factor financial penalty from the local electric utility company. These charges are highly variable in the United States and may be so low that power factor correction has virtually no economic advantage.
The following equation predicts the power factor in a three-phase system:
This equation is a numerical method of expressing the phase difference between voltage and current in a motor circuit. The current in an induction motor lags the applied voltage, and only the component that is in phase with the voltage varies with motor power. The relationship expressed in the above equation can be shown as a vector relationship in which the numerical expression is actually the cosine of the angle Ø.
The lagging current shown below is actually motor magnetizing current, which is dependent upon motor design. This magnetizing current is independent of motor load: i.e. just as much is required at no load as at full load. Thus power factor at partial loads is never as high as at full load, and at no load power factor is theoretically zero.
| IP | = | In-Phase Current |
| IM | = | Magnetizing Current |
| IL | = | Total Current |
There are two basic methods for improving power factor of a motor for a particular application.

Capacitors are the most economic method of power factor correction and one that also works at part load. Capacitors are often used to improve full load power factor to approximately 95%.
Warning: In no case should power factor improvement capacitors be applied in ratings exceeding the maximum safe value specified by the motor manufacturer. Excessive improvement may cause over-excitation resulting in high transient voltages, currents and torque's. These can increase safety hazards to personnel and cause possible damage to the motor or to the driven equipment. Excessive improvement can also cause the current to go "leading" which defeats the whole purpose of capacitors in the first place.