As per Equation, increasing the field current If increases Ef . One can visualize that higher (longer) Ef in turn increases the terminal voltage VT or the power factor angle θ, increasing the lagging reactive power output (kVAR) of the generator.

The generator can supply more lagging kVARs to the load until If reaches its permissible limit. On the reverse, decreasing If decreases both Ef and the lagging kVAR output of the ship generator.
The underexcitation can be adjusted such that Ef = VT, when the machines would operate at unity power factor delivering the maximum real
kW power to the load.
However, this can exceed the prime mover capability, which is
typically rated to drive the generator at a lagging power factor of 0.9. Further underexcitation can even make the generator operate at a leading power factor absorbing kVAR from the system. One downside of the underexcitation is lower Ef and lower steady-state power limit Pmax , in turn, a lower transient stability limit.

If the load draws lagging kVAR, it must be supplied from the generator, or else the system cannot operate in a stable mode. The excitation of the machine in normal operation is adjusted such that it maintains the required terminal voltage at around 0.9 pf lagging to match with that of the load.