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In this paper, power flow is controlled in a distributed microgrid. The local loads in the microgrid are supplied from the distributed generator (DG) with wind energy system (WES). In DG, a voltage source inverter (VSI) is operated in a current control mode in order to inject real power and achieve load compensation. The generation of reference currents for voltage source inverter depends upon the available wind power for real power injection and load reactive and harmonic component for load compensation. Simulation studies are performed using PSCAD/EMTDC to validate the proposed power flow control and load compensation in the distributed microgrid.