This paper presents voltage stability analysis and improvement of power system when there is increase in wind power penetration. Loading parameter-Voltage curve was used to calculate the loadability and the megawatt margin as the penetration level (PL) of Squirrel Cage Induction Generator Wind System (SCIG-WS) increases. Furthermore, the effects of increasing SCIG-WS PL on grid losses and equipment loading have been investigated. The results show that for the IEEE 14- bus system utilised as case study, the maximum SCIG-WS PL obtainable without reactive power compensation is 49.45%. However, increasing PL has considerable overloading effects on critical transmission lines and generators, which therefore limits the permissible PL to 33.73%. The results also indicate that the application of Static Var System (SVS) yields a significant enhancement in system loadability and reduction in power losses of the system.