The power factor is defined as the ratio of real power and apparent power. Real power is consumed to do work (useful or not); apparent power is what is delivered by the generator. The concept is only relevant when we are looking at AC power. If power is delivered to an inductive load, there is no real power consumed and power is stored then returned back to the generator. There appears no power is lost, so why do we care about power factor? What does the generator see when it is driving an inductive load? If a person is to crank the generator, how does he feel? During one half of the cycle, he consumes energy to crank the generator; in the other half of the cycle, he gets pushed by the generator. Since a person cannot real absorb this returned energy, in a sense this energy is lost. Similarly in a power plant, a free spinning turbine cannot really put energy back. Then not to mention power is lost to wiring resistance. We need to maximize the power factor to get the most out of the generator.
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