Power factor correction of predominantly inductive load component with capacitor
The power factor of a circuit is the ratio of real or useful power P (something we get out of circuit - heat, light, mechanical) to apparent power S.  It is a kind of efficiency.  The closer the pf is to 1 the better.

$$pf = \frac PS =  cos\ \theta $$

Most loads are inductive in nature.  They have a lagging power factor.  This means that the source has to provide more current than is needed to drive the load (real power P).



If you look at the blue triangle.  Source must provide S1.  Q1 (\$ Q_L \$) is lagging inductive reactive power in VARs.  I lags \$ V_S \$ by \$ \phi_1 \$.

Power factor correction adds a capacitor in parallel with the load.  This adds leading reative power to circuit.  The Qc.  P and Q1 still exist.

The capacitor acts like a source decreasing the reactive power the source must provide (Q2 = Q1 - Qc).  This means S2 will be less than S1, so the current required will be less.  I lags \$ V_S \$ by \$ \phi_2 \$.  

The power factor has improved.  Best case scenario is when \$ Q_L = Q_C \$.  The triangle disappears and pf = 1.