Static synchronous compensator (STATCOM) and battery energy storage (BES) have been increasingly employed in power systems for the reliable and economic operation of power transmission. However, the transient interaction between the electrical power of synchronous generator (SG) and the active power of STATCOM with/without BES is still misunderstood and treated incorrectly. This paper presents an analysis of this interaction and investigates the control and optimal placement of STATCOM with/without BES for the purpose of improving SG’s damping, and thus enhancing system’s oscillation damping performance. The results show that (1) the deviated electrical power of SG is not equal to the active power of STATCOM. Instead, it is related to STATCOM’s current, placement and SG’s electrical states, (2) with the increased damping as the index, the optimal location for STATCOM with BES is at the terminal of SG, while it is at the electrical mid-point of the transmission line for STATCOM without BES. Non-linear simulations and eigenvalue analysis are performed to validate the correctness of the above results.