Capacitor Bank is a device that distributes the Reactive power to electrical-coiled devices such as motor, transformer, etc. These types of devices have a very high value of Reactive power which is the electrical loss, unable to apply to the real use. However, when becoming to calculation of electrical bills, the Reactive power will be one of the factors to be calculated as well. Therefore, there is the an offset by Capacitor Bank to help increase Pf. value up to at least 0.85, based on the rule of electricity authority.
If Pf. = 1, it means that there is no loss of power at all. However, there is no such ideal case in the world. The benefits coming from compensation is the help of filtering voltage to be more stable, because the coiled devices will help filter some current. For Capacitor Bank, it will help filter voltage. Plus, help reduce harmonics in the system.
Coiled equipments such as transformer, motor, are L type. They will have heat and electromagnetic field inside. The loss also comes from the coil part. In contrast Capacitor Bank is C type, helping offset the loss.