This paper proposes a Flexible D-STATCOM (Distribution STATIC Compensator) and its newcontroller systemfaults (open-circuit or open conductor faults) and operate as a Distributed Generation (DG)to sensitive loads while the main utility source is disconnected (i.e. it is under islanded operating condition). ThusD-STATCOM operates same as a Flexible DG (FDG) and consequentlymodels of the FD-STATCOM are developed using the PSCAD/EMTDC electromagnetic transient simulationprogram. The reliability and