In this paper, a novel approach to matrix-converter-based variable frequency drives is presented. It is proposed that these drives are used to provide or draw out reactive power from the power distribution line, keeping the power factor close to unit and, simultaneously, performing their primary function of motor powering and speed control. This application of matrix-converter-based variable frequency drives is required due to the need to compensate for capacitive reactive power generated by light emitting diode lighting devices. In this study, the reactive power compensation range of the matrix-converter-based variable frequency drive is determined, and a method is proposed to extend the compensation range.