Abstract: In view of power quality problems of low power factor, voltage dips and flicker of power system caused by impact load, a compensation method of dynamic reactive power with fast thyristor switched capacitor was put forward. The method adopts reactive current detection algorithm based on improved instantaneous reactive power theory and the new type of incomplete differential PID control algorithm to fastly compensate reactive of impact loads. The experimental results show that the method not only can improve power factor of the system, but also can stabilize voltage of the transformer output, enhance control precision and response speed of the system.