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I've opened a device that states that it can reduce the reactive energy from a house, by plugin it directly to the power outlet/wall socket. I think it is a con, so I've opened it and I saw this black box. Inside this box that I've opened bare handed is this very wierd brown glued sand or silicon, I dont know.

http://i.imgur.com/X0Oaqsy.jpg

http://i.imgur.com/UOhZxyz.jpg

Can someone tell me what this box is and what kind of brown stuff is that?

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This is mostly a con. The circuit is probably only to light the LED so that it looks like it's doing something.

Most power grid loads, like your house, are inductive. Inductive power factor (current lagging voltage) can be offset by adding capacitive power factor (current leading voltage). If you get it just right, then the result looks resistive, which is the ideal. At best the box is a capacitor. At worst, it is a outright scam.

Even if the small box is a genuine capacitor, it doesn't do anything for you. You are billed by the real power you use, regardless of the reactive component. At best adding a capacitor on your line is doing the power company a slight favor, but such a small box will have a tiny effect even if it is a real capacitor.

Adding a fixed capacitance to the line blindly offsets some amount of inductance. That is probably more useful than not to the power company, because on average the load on the power line looks inductive. It will cancel a tiny amount of inductance you are causing, or if you aren't, a tiny amount of inductance from your neighborhood.

Overall, the current to run the LED causes more waste than anthing useful a capacitor that would fit into the small box can do. The purpose of this device has nothing to do with power factor. It's all about gullability factor and separating non-technical people from their money. Since you have one, it is apparently working as intended.

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    \$\begingroup\$ Last sentence was probably unnecessary. +1 for the rest of the answer and +1 to nemewsys for like your answer anyway. Also +1 to nemewsys for the question title. \$\endgroup\$ – NickHalden May 7 '13 at 23:09
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    \$\begingroup\$ The asker put a lot of effort in posing a nicely formulated question, provided pictures and uses the word "con" himself already. Your last line is uncalled for. \$\endgroup\$ – Konerak May 8 '13 at 7:09
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    \$\begingroup\$ @Nick: Someone bought one and was conned, but that doesn't necessarily mean it was the OP just because it is now in his posession. \$\endgroup\$ – Olin Lathrop May 8 '13 at 12:06
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    \$\begingroup\$ @OlinLathrop Good backtrack. \$\endgroup\$ – NickHalden May 8 '13 at 16:09
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    \$\begingroup\$ Compare the more functional industrial versions: google.co.uk/search?q=power+factor+correction+capacitors \$\endgroup\$ – John U May 8 '13 at 18:23

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