Abstract: An introduction is made in this paper to a 500 kV unified power flow controller (UPFC) demonstration project, which is implemented in Suzhou southern power grid and is scheduled to be put into operation by the end of 2017. The UPFC project will be of the largest power capacity and the highest AC voltage level of all UPFC projects in the world. The overview of the Suzhou southern power grid and its existing problems are firstly introduced, and the difficulties for implementing conventional solutions (e.g. upgrading existing transmission lines and constructing new transmission lines) are also addressed. Then, the UPFC solution are discussed, including the project scheme, the effectiveness of the solution, the implementation difficulties and the investment cost. Finally, the economic and social benefits of the 500 kV UPFC project are demonstrated though technical and economic comparisons. The analysis shows that the UPFC project, which has smaller implementation difficulties and better economic benefits than conventional solutions, can effectively alleviate the operation problems of the Suzhou southern power grid, such as limited power supply capacity, insufficient reactive power support, and high risk of commutation failures. The project is of demonstration value to the application of UPFC in higher voltage projects.