This paper presents a novel concept of utilizing a photovoltaic (PV) solar farm inverter as STATCOM, called PV-STATCOM, for improving stable power transfer limits of the interconnected transmission system. The entire inverter rating of the PV solar farm, which remains dormant during night time, is utilized with voltage and damping controls to enhance stable power transmission limits. During daytime, the inverter capacity left after real power production is used to accomplish the aforementioned objective. Transient stability studies are conducted on a realistic single machine infinite bus power system having a midpoint located PV-STATCOM using EMTDC/PSCAD simulation software. The PVSTATCOM improves the stable transmission limits substantially in the night and in the day even while generating large amounts of real power. Power transfer increases are also demonstrated in the same power system for: 1) two solar farms operating as PV-STATCOMs and 2) a solar farm as PVSTATCOM and an inverter-based wind farm with similar STATCOM controls. This novel utilization of a PV solar farm asset can thus improve power transmission limits which would have otherwise required expensive additional equipment, such as series/shunt capacitors or separate flexible ac transmission system controllers.