Active power (P) is dissipated in resistive elements, while reactive power (Q) is stored and returned by reactive elements. Reactive power does not dissipate but increases current and losses. Reactive power required by inductive loads increases apparent power (KVA) in distribution systems, reducing the power factor. A low power factor results in larger equipment sizing, higher losses, and reduced system capacity. Power factor can be improved by adding capacitors in parallel with inductive loads to supply leading reactive power.