The Power Factor is an indicator of the quality of design and management of an electrical installation. It relies on two very basic notions: active and apparent power.

The **active power P (kW)** is the real power transmitted to loads such as motors, lamps, heaters, and computers. The electrical active power is transformed into mechanical power, heat or light.

In a circuit where the applied r.m.s. voltage is V_{rms} and the circulating r.m.s. current is I_{rms}, the **apparent power S (kVA)** is the product: V_{rms} x I_{rms}.

The apparent power is the basis for electrical equipment rating.

The **Power Factor** λ is the ratio of the active power P (kW) to the apparent power S (kVA):

[math]\displaystyle{ \lambda = \frac {P(kW)}{S(kVA)} }[/math]

The load may be a single power-consuming item, or a number of items (for example an entire installation).

The value of power factor will range from 0 to 1.