I read a great explanation of this just a few days ago.
Basically, Boost + Compression = Effective compression ratio.
When lowering or raising compression, you will see around a 3% loss or gain in power for about 1 compression ratio. This isn't perfect math, but it's simply.
When raising boost, you tend to see about a 3% per 2 psi.
If you take a motor and lower its compression from say, 12.5:1 to 10.5:1 giving it approximately a 6% loss in power. Now let's say we add 10 psi, giving it an approximate 15% increase. We've netted an overall change of 9%.
Yet our effective compression ratio is actually lower. (The math for effective compression ratio is... (boost/14.7) *2) + Actual compression ratio
So 10/14.7 = .68 *2 = 1.36 + 10.5 = 11.86. Which means you can actually boost more.
The reason for all this is, even though you are compressing it, N/A does not allow for more air than atmospheric, (Also why cars have less power at higher altitudes) whereas a turbo will cram air in there causing it to have more oxygen per square inch, or more fuel to burn with the gasoline.
I hope this makes sense.
Oh and as for why to not lower your compression ratio. If you have a low compression ratio, your non boosted power is substantially less. (Like you have lost that 6% earlier, but with no gain) so you tend to notice lag more and it is less effective for racing which requires you dip lower into RPM ranges. (I.E. road courses etc.)
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