This paper presents a single-phase photovoltaic (PV) system integrating segmented energy storages (SES) using cascaded multilevel inverter. The system is designed to coordinate power allocation among PV, SES, and utility grid, mitigate the overvoltage at the point of common coupling (PCC), and achieve wide range reactive power compensation. The power allocation principle between PV and SES is described by a vector diagram. Accordingly, a sophisticated power allocation strategy is developed to allocate power between PV and SES based on a novel discrete Fourier transform (DFT) phase-locked loop (PLL) method. An appropriate reactive power allocation coefficient (RPAC) is designed to avoid duty cycle saturation and overmodulation so that wide range reactive power compensation and good power quality can be achieved simultaneously. The self-regulating power allocation control system integrating the preferred RPAC and an advanced active power control algorithm is developed to achieve the aforesaid objective. A 3.5-kW single-phase grid-connected cascaded PV system was built and tested at 1.6 kW in the laboratory. Simulation and experimental results are provided to demonstrate the effectiveness of the proposed cascaded PV system integrating SES.