The nature of reactive power
All inductive (i.e. electromagnetic) machines and devices that operate on AC systems convert electrical energy from the power system generators into mechanical work and heat. This energy is measured by kWh meters, and is referred to as “active” energy.
In order to perform this conversion, magnetic fields have to be established in the machines. The magnetic field is created by the circulation of current in coils, which are mainly inductive. The current in these coils is therefore lagging by 90° relative to the voltage, and represent the reactive current absorbed by the machine.
It should be noted that while reactive current does not draw power from the system, it does cause power losses in transmission and distribution systems by heating the conductors.
In practical power systems, load currents are invariably inductive, and impedances of transmission and distribution systems predominantly inductive as well. The combination of inductive current passing through an inductive reactance produces the worst possible conditions of voltage drop (i.e. in direct phase opposition to the system voltage).
For these two reasons (transmission power losses and voltage drop), the Network Operators work for reducing the amount of reactive (inductive) current as much as possible.