This paper presents a new power flow model for rotary power flow controller (RPFC). RPFC injects a series voltage into the transmission line and provides series compensation and phase shifting simultaneously. Therefore, it is able to control the transmission line impedance and the active power flow through it. An RPFC is composed mainly of two rotary phase shifting transformers (RPST) and two conventional (series and shunt) transformers. Structurally, an RPST consists of two windings (stator and rotor windings). The rotor windings of the two RPSTs are connected in parallel and their stator windings are in series. The injected voltage is proportional to the vector sum of the stator voltages and so its amplitude and angle are affected by the rotor position of the two RPSTs. This paper, describes the steady state operation and single-phase equivalent circuit of the RPFC. Also in this paper, a new power flow model, based on power injection model of flexible ac transmission system (FACTS) controllers, suitable for the power flow analysis is introduced. Proposed model is used to solve optimal power flow (OPF) problem in IEEE standard test systems incorporating RPFC and the optimal settings and location of the RPFC is determined.