In this paper, the control of an interface inverter for application of a hybrid photovoltaic and battery energy storage system (BESS) is proposed. The control system of the inverter consists of 2 parts including power quality enhancement and active power control. A control approach for battery state of charge and power management is proposed for improving the performance of BESS and load leveling purpose. Furthermore, to prevent the BESS from frequently charge and discharge during a day, the discharge of it can be controlled by operator or microgrid central controller. The power quality enhancement function of the proposed method mitigates the effect of the unbalance and nonlinear loads within the microgrid on the 3‐phase 4‐wire grid. The simulation results show that by using the multifunctional inverters, the unbalance and harmonics of the loads are compensated; furthermore, the neutral current, which is drawn from the grid, is competently compensated. The simulation results show that by using the proposed power management system, the load leveling and charge and discharge management of battery energy storage considering the battery limitation for the sake of extending the battery service life are achieved.
