As an industry customer of utility, electrical arc furnace (EAF), acting as a varying and reactive power sink, is the major flicker source to influence the grid power quality. In this paper, based on the field data recorded at the electric system surrounding EAF, the flicker issues and reactive power compensation requirement are quantitatively analyzed. The possible compensation solutions, including passive filter, SVC (static var compensator), STATCOM (static synchronous compensator) are discussed. Furthermore, a field data-based EAF model is proposed and implemented in the simulation software. The fast-bandwidth STATCOM solution with or without capacitor bank are designed and implemented. With the validated EAF and STATCOM model, the extensive simulations are conducted to study compensator performance and costeffectiveness for EAF flicker mitigation. Finally, the guideline for compensator selection and performance estimation is obtained.