The technical definition of a power factor in AC circuits is the ratio of real power (kW) used to do work and apparent power (kVA) supplied to the load. Ideally this should be 1, meaning that all the power supplied to the load is being used, unfortunately in the most real world situations this is not the case.
Load power factor has a significant effect on the losses experienced by a customer equipment and electrical network. It can be improved by the design and on installation of local or plant wide power factor correction solutions.