Increased attention has been given to improving power system operation. This paper presents modeling, analysis and design of reactive shunt power compensators based on PWM-Voltage Source Inverters (Pulse Width Modulation -Voltage Source Inverters). (Pulse Width Modulation - Voltage Source Inverters). The control algorithm is based on new concepts of instantaneous active and reactive power theory. The objective is to show that with a small capacitor in the side of a 3-phase PWM-VSI it is possible to synthesize a variable reactive (capacitive or inductive) device. Design procedures and experimental results are presented. The feasibility of this method was verified by digital simulations and measurements on a small scale model. (author) 9 refs., 12 figs.