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This paper deals with a dynamic voltage restorer (DVR), or a voltage-sag compensator, which consists of a set of series and shunt converters connected back-to-back, three series transformers, and a dc capacitor installed on the common dc link. The DVR is characterized by installing the series converter on the source side and the shunt converter on the load side. This system configuration allows the use of an extremely small dc capacitor intended for smoothing the common dc-link voltage. This paper provides a design procedure of the dc capacitor under a voltage-sag condition and proposes a control method for the series converter, which is capable of reducing the voltage ratings of both the series converter and the series transformers. Experimental results obtained from a 200-V 5-kW laboratory system are shown to confirm the validity of the design procedure and the effectiveness of the control method.