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This paper deals with an isolated wind-hydro hybrid generation system employing a Squirrel Cage Induction Generator (SCIG) driven by hydro turbine and a Permanent Magnet Synchronous Generator (PMSG) driven by a variable speed wind turbine feeding three-phase four-wire local loads. The proposed system utilizes two back to back connected Pulse Width Modulated (PWM) Insulated Gate Bipolar Transistors (IGBTs) based voltage source converters (VSCs) with a battery energy storage system (BESS) at their dc link. The main objectives of the control algorithm for VSCs are to achieve maximum power tracking (MPT) through rotor speed control of wind turbine driven PMSG under varying wind speeds, and control of the magnitude and the frequency of the load voltage. The proposed wind hydro hybrid system is having capability of bidirectional active and reactive powers flow, by which it controls the magnitude and the frequency of the load voltage. The proposed electro-mechanical system using PMSG and SCIG, a MPT controller and a voltage and frequency controller (VFC) are modeled and simulated in MATLAB using Simulink and Sim Power System (SPS) set toolboxes and different aspects of the proposed system are studied for various types of linear loads and nonlinear loads and under varying wind speed conditions. The performance of the proposed system is presented to demonstrate its capability of MPT, VFC, harmonic elimination and load balancing.