A capacitor panel is a physical collection of several capacitors with similar specifications that are connected in series or parallel to form a capacitor bank that stores electrical energy. Because the majority of industrial loads are inductive in nature, they require a certain amount of reactive power to function. The capacitor bank installed parallel to the load provides this reactive power. Because capacitor banks serve as a source of local reactive power, less reactive power flows through the line. The power factor can be kept close to unity by using a capacitor bank. The process of reducing the phase difference between voltage and current is known as improving the power factor. Capacitor banks, in essence, reduce the phase difference between voltage and current. In addition to the power bank, the current leads the voltage, lowering the power factor angle. A decrease in the power factor angle indicates that the power factor has improved. In an electrical substation, a capacitor bank is used for reactive power compensation and power factor correction.

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