Harmonics are caused by non-linear loads such as Power Electronics Devices (drive, computers, rectifiers, etc.), Arcing devices, Rotating machines, Variable Frequency drives etc.
A harmonic is defined as one of the components obtained from the breakdown of a periodic wave in the Fourier series. The order of a harmonic is further defined as the ratio between the frequency of the harmonic and the fundamental frequency of the periodic wave considered. Harmonics when added together result in a distorted wave form. Voltage or current waveforms assume non-sinusoidal shape. The waveform corresponds to the sum of different sine-waves with different magnitude and phase, having frequencies that are multiples of power-system frequency result in a distorted wave form.
Harmonic filters are connected in parallel with the load to be compensated. When connected in parallel with the nonlinear load, its harmonic currents are compensated and the network is loaded with fundamental current only. It improves overheating of equipment, power quality contributing to reduced energy costs etc.