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Location of the static VAR compensator (SVC) and other types of shunt compensation devices is important for the enhancement of the voltage stability for practical power systems. With the theory of the normal forms of diffeomorphism, this paper proposes a new method to solve this problem. The proposed method makes use of the nonlinear participation factors, in which the nonlinearity of power systems can be taken into consideration. As a result, the most suitable location where the SVC should be used in power system can be determined, even for the cases in which the system is characterized with strong nonlinearity. In order to show the effectiveness of the proposed method, the New England 39-bus power system with SVC is used as an example. Calculation results show that with the SVC located at the place where the proposed method determined, the voltage stability is considerably enhanced. The steady-state voltage stability index and the time domain simulation results verify the effectiveness of the proposed method.