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In this paper, a new control strategy for a low cost series connected single phase PV module inverter is introduced that delivers full PV power (at MPPT) to the load together with voltage compensation. The inverter operates during the day time as an active power compensator as well as load voltage regulator under grid voltage sag, swell or even under normal condition. The compensating voltage provided by the inverter is always added vectorially in series with the grid voltage in such a way that it maintains the load voltage magnitude constant. This eliminates the need for battery or any other energy storage device at the DC link. This reduces the investment cost of the system. Moreover, the proposed control strategy works in such a way that even in the presence of lagging power factor load, it is possible to supply reactive power back to grid that can be utilized in some other lagging power factor load connected directly to grid. An adaptive proportional resonant controller is used to track the required load voltage magnitude as well as phase angle. This control strategy is simple to implement and provides improved performance as compared to a conventional PI controller. Detailed simulation studies and experiments have been carried out and results demonstrate the efficacy of the proposed control strategy.