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The application of trinary hybrid multilevel inverter in synchronous static compensation (STATCOM) with unbalanced voltages is investigated. Benefiting from trinary hybrid topology of the inverter, the cost of STATCOM is reduced because of not only fewer switching components but also reduced cost of cooling systems and DC capacitors. The combination of vector control based on synchronous frame and staircase modulation is used in the STATCOM system presented to regulate reactive power or balance bus voltages under balanced or unbalanced conditions. To achieve this control aim, a new method based on the comparison of reference amplitudes and reference signals is presented. The performance of the proposed control strategy is confirmed by simulation and experiment.