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This paper introduces a new method for sag mitigation in distribution networks by using the energy storage capability of a cascade inverter-type dynamic voltage restorer (DVR). A parametric analysis of the sag-control capability as a function of the load power factor is first conducted, and then used to design a new control strategy that optimizes the real energy injected by the DVR. The proposed mitigation method has the capability to mitigate longer duration sags while maintaining minimal capacitor energy storage. Special consideration is also given to the case when the injected voltage attains its ceiling. The analytical results are validated through electromagnetic transients' simulation of a cascade seven-level inverter used for sag control. Experimental results are presented to demonstrate the feasibility and the practicality of the proposed mitigation method.