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I'm on my first playthrough, so I don't know what's coming up. How critical is it that I have psi-powered soldiers in my squad? Should I start hiring new rookies to psi-test and start replacing all of my "main squad members" with psi-powered equivalents? Or is it enough to just have 1-2 members?

Or do I not need any? So far the psi powers seem mostly just for fun (except mindfray is nice for enemies in cover or if you want to take down health in a controlled manner for setting up for a stun), but I don't know if it'll turn out later that the campaign is unwinnable unless I have 3 guys with psi-inspiration or mind-control or something...

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with mindfry very often having 100% chance and ignoring cover and line of sight, it's quite useful to have as many psi-gifted, as you can. –  vartec Oct 19 '12 at 9:17
    
@vartec agreed. They are great for thin men other general trash aliens with low health. –  z ' Oct 19 '12 at 11:26
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You have to get extremely lucky to get a whole squad of PSI-powered soldiers. I tested quite a lot (30-40) of soldiers and I had maybe 5 that were gifted and 3 that survived and made it to the highest rank.

I like to bring at least 2 PSI-powered soldiers with me in every battle. The very high hit-chance of Mindfray can take out monsters when it really matters (team fires at monster, but it remains with some low HP). Or – even better – they can mind control an enemy, which can turn the battle in your favor instantly. Turning a berzerker Muton is one of the greatest things. Not only will it draw (and soak up) enemy fire, you can also go and kill stuff with it in the next turn.

Regarding PSI-skills to select: The defensive PSI-skills are good as well, but I have only used them once (to calm down a panicked soldier), whereas I use the offensive spells pretty extensively. I think smoke-grenades make for a better defensive tool most of the time.

So in summary: PSI-powered soldiers aren't critical to your squad, but they can broaden the number of tactics you can choose. The spells don't cost ammo and can be casted multiple times, which makes them a no-brainer. Mind-control is extremely powerful and can hit with a chance of 100% almost all the time with an experienced soldier that wears PSI-armor.

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Mind control has two minor downsides I've discovered: one, you can't shut it off yourself so you have to wait for it to expire on the aliens' turn -- which gives the former victim a free turn to get away or shoot you. Two, if you make your "volunteer" scout hidden areas and its comrades shoot it, your people get the "fallen comrade" willpower debuff for some reason... –  Shadur Oct 19 '12 at 13:52
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@Shadur Didn't know about the will debuff. You're right about the expiration of MC. It can be dangerous, but usually the alien gets killed by its comerades. Otherwise I just position my soldiers at favorable positions with overwatch and the alien at an open, exposed area when mind control is about to expire. –  bummzack Oct 19 '12 at 14:34
    
"passive" means you don't have to activate it. Did you mean "defensive?" –  BlueRaja - Danny Pflughoeft May 13 '13 at 21:53
    
@BlueRaja-DannyPflughoeft Thanks for pointing that out. Fixed. –  bummzack May 14 '13 at 7:28
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@bummzack Psi Inspiration looks defensive, but can also be used offensively...it works like this: you've got two (or more) psi-soldiers, and you need to Mind Control (or even Mindfray) an alien this turn, but the chance for success is not 100%. So you have your lesser psi soldier use Psi Inspiration to boost the will of your better psi soldier, who then uses Mind Control with a higher chance of success (or, your solder whose skill isn't charged boosts the will of the soldier who has the skill available). –  Theodore Murdock May 14 '13 at 12:22
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Psi powers definitely aren't a prerequisite for winning the game, as long as you have at least 1 operative who is gifted for plot purposes, however, they are great. With 6 psi soldiers, you can use mindfray to have a guaranteed kill against 2 heavy floaters/elite mutons, 6 thin men/floaters, 3 regular mutons, etc.; provided you have LoS on them. PROTIP: use mindfray to soften up targets, as it decreases their will and other attributes - if one operative has an 87% chance to hit and the other a 100%, use the second's ability first and the first operative will have a 100% to hit.

Mind controlling an enemy can give you a chance to catch your breath, especially if the other aliens are closer to it than your soldiers, as they will have no hesitation to fill their ex-comrade with plasma. A nice bonus of mind controlling an enemy is that if it is killed while under the effects, its weapons will not self-destruct.

Panic can also be quite useful to disable flanking enemies or enemies that threaten one of your operatives. The lack of penalties for distance and cover makes them especially useful.

If you are not playing on Ironman, you can make all of your favorite operatives gifted.

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No doubt PSI-Agents are always preferable. The most useful PSI-Ability (imho) is the Mindfray, cos it is extremely accurate (100% to hit on almost every alien, if your will is high enough), it does 5 damage (and so it is an insta-kill for some low-health enemies like sectoids or thin men). Also it lowers enemys will and accuracy.

There is no problem at all to have all of your squad members as PSI-Soldiers. Yes, they are rare, but not impossible to find. You just need to filter them out of the rest.

Rookies have willpower in the range of 44 to 52 and does not depend on agents class. The will-bonus on levelup is also not constant - it varies from +4 to +12. So the maximum will the colonel can have is 124 (without bonuses like psi armor/psi inspiration/combat drugs). You can trick the game via save/kill/reload on the last enemy and achieve the maximum will-bonus.

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Mind you, by the time you're generally likely to start having psi operatives show up, pretty much all of your available weapons should be one-shotting sectoids and gunmen anyway... –  Shadur Dec 16 '12 at 16:00
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