Unified Power Flow Controller (UPFC) is use for controlling the real and reactive power on the transmission line and the bus voltage simultaneously and independently. An additional task of UPFC is to increase transmission capacity as result of power oscillation damping. The effectiveness of this controller depends on its optimal location in the power system network. A residue factor has been proposed to find the optimal location of the UPFC controllers and Eigen value analyses are used to assess the most appropriate input signals (stabilizing signal) for supplementary damping control of UPFC to damp out the inter-area mode of oscillations. The proposed residue factor is based on the relative participation of the parameters of UPFC controller to the critical mode. A simple approach of computing the residue factor has been proposed, which combines the linearized differential algebraic equation model of the power system and the UPFC output equations. The placements of UPFC controllers have been obtained for the base case and for the dynamic critical contingences. The effectiveness of the proposed method of placement is demonstrated on practical network of 25 bus south Malaysian Power system
