Surge capacitors are special capacitors connected to transmission lines. The function of these capacitors is to absorb the surge caused by waves which travel along the transmission lines.
The Surge Capacitor is always connected to the power supply. When the Surge appears it absorbs the surge, holds it on for sometimes and then releases it into the system.
Surge Capacitors have a very fast response time as they are continually in circuit.
However, the limitation of the Surge capacitors is that it cannot absorb a high current surge. High current surges can only be discharged by lightning arrestors.
Hence, the Surge capacitor is usually connected along with a lightning arrestor.