All electrical equipment needs reactive power apart from active power for their operation. The need for reactive power arises because the current and voltage waveform are not in phase with each other. In Inductive loads, the current lags the voltage and in capacitive loads the current leads the voltage. The power factor is defined as the cosine of the angle between current and voltage vector. When the current and voltage vector are perfectly in phase as in the case of a purely resistive load, the phase angle between voltage and current is zero and the power factor is unity. This power factor is called the displacement power factor as it relates to displacement of current vector with respect to voltage vector.