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Wavelet transform based energy function approach for detection of some power quality (PQ) disturbances such voltage sag, voltage flicker, voltage swell, harmonics, inter harmonics in grid connected wind power system is proposed in this paper. The current signal is processed through Wavelet transform for PQ events detection. Initially, the current is retrieved at a sampling frequency of 20 kHz and DWT is used to decompose the signals of PQ events and to extract its useful information. In the case study, the power quality disturbances are created in the grid, and proposed algorithm detects the power quality disturbances effectively within one and half cycles for 60 Hz system. Thus, a new diagnostic method based on the grid modulating signals pre-processed by Discrete Wavelet Transform (DWT) is proposed to detect grid power quality disturbances. The system is simulated using MATLAB software and simulation results demonstrate the effectiveness of the proposed approach under time-varying conditions.