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Is it possible to install capacitor bank in the Line side when the ATV1200 is installed.

it is NOT recommended to connect this capacitor bank when the ATV1200 is installed.
This capacitor bank is a power factor correction to compensate the reactive current of the motor. With the ATV1200 (with diode rectifier) the power factor is nearly 1 -> there is nothing to compensate. The capacitor bank would over-compensate which would result in a capacitive power factor.

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