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In recent years, the penetration level of renewable-based distributed energy resource (DER) units has increased significantly. Consequently, standards have been developed and deployed demanding small DER units to operate in constant power factor mode and large DER units in voltage control mode. This results in exposing small DER units to the problem of slow voltage recovery for contingencies like faults. Hence, this paper proposes a methodology of static and dynamic reactive power compensation to avoid tripping of small DER units due to slow voltage recovery. A new sensitivity index has been developed for the placement of STATic synchronous COMpensator (STATCOM) to ensure fast voltage recovery at all the buses of interest. The case studies involving two IEEE test systems with varying size and load compositions validate the proposed methodology and index.