This technical guide is the second in aseries of four technical guides on variable renewable energy(VRE) grid integration produced by the Energy SectorManagement Assistance Program (ESMAP) of the World Bank andthe Global Sustainable Electricity Partnership (GSEP). Itfocuses on the main functionalities, differences andbenefits of various compensation devices that can beemployed to increase system transfer capacity, systemstability, power quality and flexibility to cope withincreasing penetrations of renewables in the system. Theapplications of FACTS devices are associated with fouressential technical enhancements of system capacity, systemreliability, power quality and system controllability. Theapplication of the FACTS devices for these enhancementswould depend on the system needs which would be identifiedand recommended through the power system studies during theinterconnection process. Power system studies are furtherelaborated in "STUDIES FOR GRID CONNECTION OF VARIABLERENEWABLE ENERGY GENERATION PLANTS – Technical Guide 3".