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WikiAnswers does not support pictures, so here are the instructions for drawing the diagram yourself.

Draw a circle, centered at the origin. Think in polar coordinates, where radius is power and angle is the phase angle between voltage and current. The convention is that a purely resistive load, with a power factor of 1, has a vector going straight up the Y axis. (As opposed to normal trigonometry, where 0 theta is along the X axis.)

Now, rethink in rectangular coordinates. The length of the vector to the circumference of the circle, is volt-amps, VA or KVA or MVA as appropriate. The Y coordinate is watts, W or KW or MW as appropriate. You can see that, in the resistive case, where the phase angle is zero, that VA and W are equal. We call that power factor = 1.

Now, lets introduce some reactance. Lets say the system has an inductive load with a phase angle (lagging) of 45 degrees. Redraw the vector upwards with a 45 degree angle. Typically, you go clockwise for a capacitive load and counterclockwise for an inductive load. It does not matter which orientation you use, so long as you are consistent in your meanings.

Notice that the Y coordinate is now 0.707 (square root of 2) and the X coordinate is -0.707. Now, VA is still one, because the length of the vector is still one, but Y is 0.707, so watts is 0.707. We call that a power factor of 0.707, because power factor is true versus apparent, i.e. Y/R. If you look at X, you see that it is -0.707. We call X volt-amps-reactive or VAR or KVAR or MVAR as appropriate. Don't worry about the sign; VAR is 0.707, and the negative sign means that it is inductive, as opposed to capacitive.

In the theoretical case of an ideal inductor or capacitor, with zero impedance for the conductors and the source voltage, the vector would be aligned with the X axis, pointing left for inductive and right for capacitive. This means the power factor is zero. Note that VA is still 1. That means that energy is being transferred, with a cost, but the electric meter is standing still because it reads watts, not volt-amps, nor volt-amps-reactive.

You may wonder about the case where the vector points down. That is simply the case of a generator, instead of a load.

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