This article presents reactive power compensation on load side by determining the instantaneous demand of load’s reactive power. Conventionally this is done by adding capacitor banks, which are either fixed value capacitors or an array of capacitors, which are brought into the circuit by means of electromechanical switches. However the importance of this article is brought by use of power electronic converters, which generate reactive power on basis of instantaneous measurement of reactive power demanded by the dynamic load, hence reducing the compensator size and improving quality of compensation, which could not have been provided by the capacitor bank techniques. A detailed dynamic model of the complete scheme is developed to study the behavior of the proposed compensator. Simulated results are presented and discussed in detail to demonstrate the reactive power compensation and load balancing capabilities of the compensator.