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The AREVA T&D Technology Centre has proposed a novel type of fault current limiting reactor based on a laminated iron C-core with a demagnetised magnet in its airgap. The fault current limiter will automatically increase its reactance during a fault in a power system to which it is connected. In this paper, the principle used to change the magnetic nature of the device will be explained in detail. This paper will also describe the design of the fault current limiter and demonstrate its fault current limiting performance through a case study.