A Power Factor is a measure of how effectively electricity is being used on a site. Certain types of equipment (e.g. electric motors) can cause poor power factor .This results in a system drawing more power from the network than is actually required. Distribution companies will charge customers for this through reactive power charges. Power factor can be improved by the installation of power factor correction equipment. Power Purchase Agreement (PPA) The off-take contract from a large customer to buy the electricity generated by a power plant.