Reactive power compensation is an electrical engineering practice used to adjust the balance of reactive power in a power system. It is a widely used technique in industrial facilities, businesses and energy distribution systems.

Reactive power is a type of energy produced by inductive loads in an electrical system. Such loads can cause some form of energy loss in the electrical system due to the reactive power consumed by devices such as inductors, motors and transformers. Reactive energy can cause unnecessary losses in transmission lines and electrical equipment and reduce the efficiency of power provided by utilities.

Reactive power compensation is a technique used to minimize such reactive power losses.

This is usually accomplished through the use of devices such as capacitor banks or reactors. These devices are activated to balance or regulate inductive reactance, preventing excessive consumption of reactive power.