A capacitor is formed by two electrodes, electrically insulated from each other. The electrodes themselves must be conductive and are typically made from metal. They can be any shape, although two parallel plates are easiest to visualise.

Capacitors have the ability to store energy in an electric field between these electrodes when a voltage or 'potential' is applied to the circuit. The property of capacitance relates the amount of energy stored in this field to the applied voltage or potential.

By placing non-conductive material between the electrodes, the ability for the capacitor to store energy increases and so the capacitance increases. This material between the electrodes is referred to as the 'dielectric'.

The key property of dielectric materials is the amount of charge that can be stored.

As a dielectric liquid is introduced between the electrodes of the capacitor, the capacitance changes proportionately and liquid level can be determined.

To measure variations in the capacitance, electric energy flowing into and out of the electrodes is measured as the voltage or potential is varied. This flow of energy is created by connecting the electrodes to an alternating current measurement circuit. The greater the energy flow to the electrodes, the greater the capacitance, meaning more dielectric between the electrodes.

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