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Electrical arc furnace (EAF), acting as a fast varying real power and reactive power sink, not only induces the power quality pollution back to utility, but also prevent the effective production of metal industry. In this paper, a methodology of designing an energy storage system (ESS) for EAFs is presented. Based on the field data-based study of a typical EAF, the power, energy, and speed requirement of ESS are quantitatively evaluated. Based on the requirement, an ultra-capacitor energy storage system (UESS) is deemed as the suitable type of ESS for the EAF application. The design of UESS is described, and the preliminary experimental results are given.