Power factor with VFD's

There are two "kinds" of power factor; 1) Displacemnt Power Factor and 2) Distortion Power Factor. Most PF meters only read Displacement PF, and from a tarriff and penalty standpoint, that's all that counts. So VFDs do appear to improve PF in an AC motor, because the motor's actual PF is essentially filtered by the conversion done by the VFD. But that self same conversion creates harmonics, which itself presents a complex power factor scenario to the line source, referred to as Distortion Power Factor, but this complexity actually interferes with recording instruments in such as way as to not show up. It does, however, still represent the same power delivery issues that Displacement Power Factor does; the source, in the case of your yacht the on-board generator, must still supply all of the apparent power. But the distortion PF varies by the amount of THD, so it's difficult to quantify. The best method of mitigating it is to add line reactors and/or DC bus chokes on each VFD.