Wide-scale penetration of distributed-generation (DG) units into a weakly meshed distribution system is one of the major concerns for power system engineers in recent years. As grid standards limit voltage control operation of small DG units, a lack of sufficient reactive power support brings the problem of slow voltage recovery and this leads to the usage of expensive flexible ac transmission system (FACTS) devices, such as a static synchronous compensator (STATCOM). In this paper, a systematic methodology has been developed for fast voltage recovery at the DG bus. This methodology reduces the number as well as the rating of STATCOMs through the tuning of control parameters. The STATCOM rating at selected locations has been tested and verified to be adequate at various dispatch levels of DG units. Additional benefits of STATCOM tuning on the damping of weak modes have also been studied. An IEEE industrial test system has been used for validating the methodology, providing grid compatible voltage recovery and satisfactory damping performance.