Plants equipped with very large, intermitted inductive loads, such as large motors, compressors etc., may require switched capacitors; that is, capacitors are connected to individual motors or groups of motors. Therefore, they are only in action when the motor load is turned on. Or, capacity may be switched on and off at the substation, depending on measured power factor. The switching feature is only required if the capacitors needed are so large that they cause an undesirable leading power factor during times when large motors are turned off.
For more information, read the “Reducing Power Factor Cost” Fact sheet (pdf) published by the U.S. Department of Energy. Note: Adobe Acrobat Reader is required to view and print pdf files.