This document discusses using a small hydro generating station to improve the power factor in an electric grid. It describes how a synchronous generator or synchronous condenser can be used for this purpose. The synchronous condenser option is analyzed in more detail, showing how increasing the field excitation can successively provide more reactive power compensation at leading power factors of 0.1, leading to an improvement in the overall system power factor. Simulation results are presented and it is concluded that the power factor can be improved from 0.6 to 0.769 using this approach.