This paper presents a design of voltage controller for  standalone self-excited induction generator (SEIG) driven by a variable speed wind turbine. Particle swarm optimization (PSO) algorithm has been applied to predict the value of capacitance necessary to maintain the generator terminal voltage at a preset value under specific load and speed conditions. The proposed model completely avoids the tedious and erroneous manual work of segregating the real and imaginary components of the complex impedance of the machine for deriving the specific model for each operating modes. The use of FACTS device called static synchronous compensator (STATCOM) to control the reactive power and keep the output voltage of standalone SEIG at rated value under normal and abnormal conditions such as, de-excitation due to over-loading under balanced and unbalanced load conditions, symmetrical fault, and variation of wind turbine speed is presented. The dynamic model of the system is developed and a methodology to decide  the  ratings  of STATCOM  components  such  as  the  DC  bus  capacitor,  AC  side  filter  and insulated gate  bipolar transistors  (IGBT)  is introduced. The proposed system is modeled and simulated using Matlab/Simulink software program to examine the dynamic characteristics of the system with proposed control strategy. Dynamic simulation results demonstrate the effectiveness of the proposed STATCOM voltage controller.