The power factor (PF) represents the relationship between the active power (real power doing useful work) and the apparent power (total power, including both active and reactive power) in a power system. Specifically, the power factor is the ratio of active power to apparent power and is typically expressed as cosφ.

1. A Higher Power Factor ≠ Better System Performance: 

Risk of Overcompensation: In theory, the power factor can be increased to near 1 (purely active power). However, when the power factor exceeds 1, it indicates that the system might be in a capacitive load state, leading to overcompensation. This can cause a rise in voltage, potentially destabilizing the power grid and increasing the risk of equipment damage.

2. Balanced System Design:

Optimal Efficiency: While a high power factor is generally desirable because it reduces the amount of reactive power and associated losses in the system, aiming for a power factor around 0.9 is typically system performance while avoiding the pitfalls of overcompensation. A power factor around 0.9 means that the system is well-balanced, with a manageable amount of reactive power that supports the stable operation of the grid without causing excessive voltage or current issues.

3. Practical Considerations in Power Factor Correction:

Economic Factors: Achieving a power factor close to 1 often requires additional equipment, such as capacitors for reactive power compensation. However, pushing the power factor beyond 0.9 may result in diminishing returns, where the cost of further correction outweighs the benefits in terms of energy savings and reduced losses.

Regulatory and Contractual Requirements: Many utilities impose penalties or provide incentives based on the power factor, typically requiring a minimum of 0.9. This threshold balances the need for efficient energy use with the technical and economic feasibility of power factor correction.

4. Impact on Electrical Equipment: 

Avoiding Overvoltage: A power factor significantly higher than 0.9, especially if it exceeds 1, can cause overvoltage conditions in the electrical system. Overvoltage can damage sensitive equipment, reduce the lifespan of insulation materials, and increase the risk of electrical faults.

In summary, while a higher power factor reduces energy losses and improves the efficiency of power delivery, maintaining it around 0.9 is usually the best practice. This level ensures a good balance between efficiency, system stability, and economic viability, avoiding the negative consequences of overcompensation or unnecessary correction efforts.