The SMES is characterized by several superior features such as allowing highly efficient, high-speed, input and output of electric energy. The application of a SMES to an electric power system contributes to stabilizing the power system and maintaining power quality, and it is anticipated that there will be extensive beneficial effects, such as upgraded controllability of power systems. Previous national development projects established the basic technology necessary to make the SMES feasible; however, challenges related to reducing system cost have remained. In the project phase from FY1999 to FY2003, the focus of development was to produce an SMES dedicated to power system stabilization, while placing a particular emphasis on finding ways to reduce the costs of the superconducting coil and peripheral devices. As a result, we now expect to be able to develop a low-cost SMES that is competitive with other power-control devices including SVC.