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This research project is a study on the solar storms and their effects on power systems.The main focus will be on geomagnetic induced currents(GICs)and their effects on power transformers,i.e.half-cycle saturation,increased reactive power consumption,high levels of harmonics and heating.The research project may be divided into parts.The first part presents the literature review on solar storms and geomagnetic induced currents,and their effects on power transformers and power systems.The second part concerns the simulation setup in MATLAB-SIMULINK and the corresponding results.First the circuit diagrams and power transformer models are explained.Then measurement methods are described and results are given and discussed.Solar storms are inevitable and has a number of negative effects on technological systems.High geo-electric field values due to severe geomagnetic storms cause geomagnetically induced currents(GIC)to flow in conducting structures of the power system.For power lines,the geomagnetic induced current enters and leaves through the neutral grounding of transformers.Geomagnetically induced currents(GICs)flow can cause tripping of components with to sensitive safety limits and damaging of transformer.Cascading failure may be initiated,which in turn can lead to blackouts and loss of production.Mitigation methods of GICs have been discussed then apply new method to mitigate it by using capacitor connected parallel with resistor and then connected with GICs voltage source at ground for power transformer,because capacitor alone cause ferroresonance in the transformer.The results have been given for the circuit diagram where the geomagnetically induced current is represented by an AC voltage source with small frequency(0.1 Hz)connected to the ground of the power transformer.Finally the effects of GICs on differential protection for three phase power transformer modelled and study the behavior of internal and external faults with and without GICs and effects of capacitor in isolation device and to mitigate this phenomena.