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F.A.Q.#22.

What is power factor?...
   Power factor is the ratio of true power or watts to apparent power or volt amps. They are identical only when current and voltage are in phase than the power factor is 1.0. The power in an ac circuit is very seldom equal to the direct product of the volts and amperes. In order to find the power of a single phase ac circuit the product of volts and amperes must be multiplied by the power factor. Ampmeters and voltmeters indicate the effective value of amps and volts. True power or watts can be measured with a wattmeter. If the true power is 1870 watts and the volt amp reading is 2200. Than the power factor is 0.85 or 85 percent. True power divided by apparent power. The power factor is expressed in decimal or percentage. Thus power factors of 0.8 are the same as 80 percent. Low power factor is usually associated with motors and transformers. An incandescent bulb would have a power factor of close to 1.0. A one hp motor about 0.80. With low power factor loads, the current flowing through electrical system components is higher than necessary to do the required work. This results in excess heating, which can damage or shorten the life of equipment, A low power factor can also cause low-voltage conditions, resulting in dimming of lights and sluggish motor operation.
 Low power factor is usually not that much of a problem in residential homes. It does however become a problem in industry where multiple large motors are used. Power Factor Correction Capacitors are normally used to try to correct this problem.

This is from a Power Factor expert in Waltham MA.
In recent years, "power factor" also refers to switch-mode power supplies; good ones are called "power-factor-corrected".
Switch-mode power supplies just about never have what the electronics people call a power transformer, that is, a 60 Hz (or 50 HZ, overseas) transformer with its primary connected to the AC line. Instead, they have rectifiers that connect directly (no filter choke) to capacitors that provide high-voltage DC to the switch-mode converter.
Problem is that the charge on those caps reverse-biases the rectifiers until the voltage comes near its peak, when the current rises rather quickly from essentially zero to a substantial value. Once the caps are charged, the line current drops rather quickly as the voltage drops again.
The current is a series of pulses, and therefore has a lot of harmonics. Such power supplies (really, "power converters" is a more-correct term) are sometimes said to have poor power factor, although there's not a lot of phase shift between voltage and current, as there would be with an inductive load.
PF-corrected switchmode supplies are mandatory in Europe, and have been for a while.
They have clever extra electronics in them to make the current waveform sinusoidal, or quite close; harmonic content of the current waveform is low.
When Apple Computer first had a large number of newly-built computers on burn-in, the distribution transformer for that circuit overheated; I forget, but it might even have burst (liquid-cooled) and perhaps caught fire. IIrc, a replacement transformer also overheated.
It was one of the more attention-getting events that made awareness of harmonics more commonplace.
(I'll skip explaining "switchmode", btw. Ask, if interested.)
Best regards, and thanks for posting the FAQ!

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