Motor Insulation Failure

Your doubts are well founded, especially if the capacitor bank is always in the circuit under varying load conditions. Poorly chosen capacitor sizes and/or control strategies can lead to unacceptably high transient voltage conditions during switching or anything other than full load conditions. There is also the chance for a resonance condition to occur, all of which may lead to punctured insulation in the capacitors and the motor windings.

This paper is an introduction to the problem, Google will provide many more references.

^{In our plant we are having ABB VFD's ACS 800 which is used to run 690V Kirloskar make motors. Twice our motor have failed on insulation grounds. Voltage is maintained at 688-694V. Kindly suggest what can be the reason if capacitor bank are not.}

This sounds as though the insulation failure is on the motors that are run from the VFD, so I do not understand why you have raised the read herring (irrelevant issue) regarding DOL motors...

If so, this would have nothing to do with any PFC capacitors, although why you have them and why they run leading is an entirely different issue. Insulation damage done to motors being run from VFDs is a very well known problem, referred to as the "Reflected Wave" and/or "Standing Wave" phenomenon. There are countless documents available on the web explaining it and offering mitigation options, many referenced from within the history of this forum if you know how to search.

So did nobody take this issue into consideration when putting the VFD systems out for tender? Usually it is put to the VFD vendor to include the necessary mitigation options to prevent this, sometimes it is put onto the motor supplier but they often have no knowledge of how bad the problem will be, yet the VFD supplier will. So who was supposed to prevent this from happening on your project? Did nobody at ABB bother to mention it to you? If not, that would be EXTREMELY irresponsible in this day and age, and I know from the fact that you mentioned an ACS800 that this is not old equipment.

If it were me, and my tender offer included a clause that insisted that the motors be properly protected from insulation breakdown, I would be calling ABB for taking care of the failures. If nothing was mentioned and someone just bought the lowest cost package, then you got what you paid for. You can still mitigate it to protect the new motors, but first you need to find someone at your location who can come out and investigate it to provide the CORRECT solution. Otherwise you might be throwing good money after bad...