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1- improve voltage levels
2- reduce line losses
3- enhnace the power factor
Capacitor bank is used to even out the electrical fluctuation. Also it helps in providing constant voltage when operating on AC Supply. During the time of zero voltage in the AC cycle, the capacitor bank provides the potential difference.
as in transmission , we have to maintain the value of reactive vars for losses control. therefore for too many inductive vars due to inductive load , we use capacitors as leading vars producer in the circuit. thus we are controling the value of reactive power in transmission and hence losses are controled.
Capacitor banks should always be in consumer side. in low voltage systems.