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Cascaded H-bridge multilevel converter (CHMC) is a promising topology for flexible ac transmission systems such as static synchronous compensator (STATCOM) applications. Attention was drawn to the issue of converter reliability due to the large number of power devices used in CHMC applications. This paper proposed an effective fault-tolerant strategy by using H-bridge building block (HBBB) redundancy in CHMC-based STATCOM. The operating principle and the control strategy of the fault tolerance are proposed and discussed. The controller design consideration for the fault-tolerant STATCOM is presented. The proposed fault-tolerant control strategy is implemented on a seven-level CHMC-based STATCOM simulation platform and a five-level CHMC-based STATCOM hardware prototype. Simulation and experimental results are illustrated to verify the feasibility of the proposed fault-tolerant design with the HBBB redundancy.