Where should I install capacitors in my plant distribution system?

Option A: Downstream of the overload relay

This is the most efficient location since the reactive power (kVAR) compensation is produced right where it is consumed. Line losses and voltage drop are minimized. The capacitor is switched automatically by the motor starter, so it is only energized when the motor is running. No separate switching device or overcurrent protection required. Also, thermal overload needs to be set carefully, since the capacitor will cause a reduction in amps through the overload, hence lower trip setting for the same level of motor protection.

NOTE: This works only with contactor starters. Special care needs to be taken in cases where softstarters are used.

Option B: Between the contactor and the overload relay.

Same as Option A except that the overload relay can be set to the full load amps as per motor nameplate. This location is often preferred by panel builders as overload trip setting is simplified.

Option C: Between the circuit breaker and the contactor

The capacitor can act as a central kVAR source for multiple motors fed by the same circuit breaker. Recommended for frequent jogging & reversing applications. Disadvantage: as the capacitor stays energized even when the motor(s) are not running, there is a risk of overcompensation and leading p.f. at light load. Also, line losses are higher than with Options A & B as the reactive current is carried further.

Option D: As a central compensation source (cap bank) connected to the main distribution bus

Of the four options, this is the most cost-effective as it uses a few large kVAR capacitors rather than many small units. Also, it is a single installation, hence easier to operate, monitor and control. A power factor controller switches the capacitors in and out to ensure the correct level of compensation on the network.