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This paper addresses improvements in damping of distributed generation systems made possible by using the real and reactive power capacity of power electronic converters interfaced to the distribution grid. A new control approach is presented in which a grid connected synchronous generator is torque-controlled by a power converter, which may be remote from the generator. A reduced model is used to develop the control method, which is termed compensated generator control. Excellent performance of post-fault damping is illustrated through simulation, and it is shown that the method provides a significant increase in damping performance when compared to other methods.