A Power quality problem is an occurrence manifested as a nonstandard voltage, current or frequency that results in a failure or a disoperation of end user equipments. Power quality is certainly a major concern in the present era; it becomes especially important with the introduction of sophisticated devices, whose performance is very sensitive to the quality of power supply. Voltage sag is one of the severe power quality problems. This report addresses all the different aspects related to voltage sag problem, such as: its types, consequences and mitigation. At present, a wide range of very flexible controllers, which capitalize on newly available power electronics components, are emerging for custom power applications. Among these, the distribution static compensator (D-STATCOM) and the dynamic voltage restorer (DVR) are most effective devices, both of them based on the VSC principle. MATLAB SIMULINK has been used in this project to perform the modeling and analysis of such controllers. A DVR injects a voltage in series with the system voltage to correct the voltage sag. The steady state performance of DVR is obtained for various voltage sags/swell levels. Comprehensive results are presented to assess the performance of each device as a potential custom power solution.