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Power electronic converters are commonly used for interfacing distributed generation (DG) systems to the electrical power network. This paper deals with a single-phase inverter for DG systems requiring power quality features, such as harmonic and reactive power compensation for grid-connected operation. The idea is to integrate the DG unit functions with shunt active power filter capabilities. With this approach, the inverter controls the active power flow from the renewable energy source to the grid and also performs the nonlinear load current harmonic compensation by keeping the grid current almost sinusoidal. The control scheme employs a current reference generator based on sinusoidal signal integrator and instantaneous reactive power (IRP) theory together with a dedicated repetitive current controller. Experimental results obtained on a 4-kVA inverter prototype demonstrate the feasibility of the proposed solution.