Automatic Voltage Regulator adjusts the excitation so that at the system design power factor, the voltage is correct whatever the current. If however it adjusts the excitation to give the correct voltage at other power factors, then two machines will not run in parallel. One can supply a huge leading current and the other a huge lagging current. A “droop” is needed to give a lower voltage if the power factor lags by more than the system design. This is achieved by the compounding. Faulty Compounding causes unstable sharing of kVAr which can be quite violent
