The document discusses STATCOM (Static Synchronous Compensator), which is a shunt connected reactive power compensation device capable of generating and absorbing reactive power using a voltage source converter. It can improve power system performance by providing dynamic voltage control, damping power oscillations, improving transient stability, and controlling voltage flickering and reactive/active power. The principle of operation involves using a voltage source converter to generate a balanced set of three sinusoidal voltages to exchange reactive power with the system by varying the amplitude and phase angle of the output voltage.