Most load types in power system belong to inductive load. In addition, power electronic devices are widely used in power enterprises, so the power factor of power grid is low. Lower power factor reduces equipment utilization ratio, increases power supply investment, damages voltage quality, reduces equipment service life, and greatly increases line loss. In order to improve the energy waste caused by the low power factor of power grid and these unfavorable factors of power supply production, it is necessary to effectively improve the power factor of power grid. Obviously, it is unreasonable and usually impossible for these reactive power to be supplied by generators and transmitted over long distances. Reasonable way is to generate reactive power where reactive power is needed, that is, to increase reactive power compensation equipment and devices. II. Structure Composition Generally speaking, low price Capacitance Compensation Cabinet is composed of cabinet shell, bus, circuit breaker, disconnector, thermal relay, contactor, lightning arrester, capacitor, reactor, primary and secondary conductor, terminal row, power factor automatic compensation control device, panel instrument, etc. III. Basic Principles In the actual power system, most of the loads are asynchronous motors. The equivalent circuit can be regarded as a series circuit of resistance and inductance. The phase difference between voltage and current is large and the power factor is low. After shunt capacitors are connected, the current of capacitors will offset part of the inductance current, so that the inductance current decreases, the total current decreases, the phase difference between voltage and current decreases, and the power factor increases. A reactive power automatic controller is installed in the compensation cabinet, which automatically puts in or removes capacitors according to the load force rate. The main function of the controller is to make the load close to the required reactive current, thereby improving the power factor. For enterprises, the main reason is to avoid the penalty of power factor not up to the standard (0.9).