Power Factor is an electrical term used to describe the ratio of kW to kVA or working power to apparent power. This is a measure of electrical efficiency.
Working Power – The "true" or "real" power used in all electrical appliances to perform the work of heating, lighting, motion, etc. This is expressed as kW or kilowatts and are the consumed element of electrical power.
Apparent Power, which is called kVA, (kilovoltamperes) is the component of electrical power that comprises both the kW load as well as a nonconsumed element known as inductive reactance commonly referred to as kilovolt ampere reactance or, kVAr. Every home and business has both resistive and inductive loads. Inductive loads such as motors and transformers require kVAr to operate whereas resistive loads such as incandescent lights and heating elements do not. The ratio between these two types of loads becomes important because as you add more inductive equipment the power factor may be adversely affected.
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