Real, Reactive, and Apparent power

"Real" power is the power that does actual work - e.g: creating heat, lifting loads, etc.

"Reactive power" is power where the current is out of phase with the voltage, and the "Volts x amps" doesn't do any real work. The current that charges a capacitor, for example, or current that creates the magnetic field around a coil for another.

"Apparent power" is the mathematical combination of these two.

The best representation is a vector diagram, where "Real" power is represented by the positive X-axis, and reactive power is represented by the Y-axis. Inductive power - the current involved in creating and maintaining an electromagnetic field around a winding - can be represented by the positive Y-axis. Capacitive power can be represented by the negative Y-axis. Obviously, those two will cancel each other somewhat, leaving a vector that is either positive or negative on the Y-axis.

Take, for example, a large three-phase induction motor. A small but not insignificant amount of current is necessary to magnetize the windings of the motor. Its capacitive component is negligible. This current does not contribute to the production of shaft torque, and can be represented by the current on the positive Y-axis we'll call Q. The portion of the current that does actual work can be represented by the positive X-axis we'll call P. This produces a vector sum with a value of Sqrt(P²+Q²) as shown below:

CosΦ is the power factor, which for a three-phase induction motor is generally on the order of 0.8 to 0.9. In order to reduce Φ and improve power factor, quite often capacitors are added to the motor circuit. The function of these capacitors is to provide the magnetizing current, thus reducing the amplitude of the reactive power Q. Remember, inductive power is positive Y-axis, capacitive power is negative Y-axis. The lower the angle of Φ, the closer the apparent power is the real power. In actuality, once the motor magnetic field is established, the current required to sustain it circulates through the added capacitors and is not drawn from the utility.

The generating utility cares about the apparent power because whether the current being drawn is producing useful work or not, the utility has to be able to provide that many amps. The better the power factor, the lower the total amp draw.