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You calculate power by multiplying voltage x current x Power Factor (PF). PF = 1 for a resistive load so you essentially convert maximum power with a resistive load. With an inductive load the PF decreases from 1 toward zero. Hence the lower the power factor the less efficient the system. This reduced PF is caused by the current and voltage sine waves being out of phase. If they are 180 degrees out of phase you have zero PF. PF correction involves circuitry that basically helps "tune" the circuit to reduce the lag. Capacitors are involved heavily in this process to tune the circuit.

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Q: How does power factor correction solve the problems caused by inductive loading?
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