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Performance optimization, system reliability and operational efficiency are key characteristics of smart grid systems. In this paper a novel model of smart grid-connected PV/WT hybrid system is developed. It comprises photovoltaic array, wind turbine, asynchronous (induction) generator, controller and converters. The model is implemented using MATLAB/SIMULINK software package. Perturb and observe (P&O) algorithm is used for maximizing the generated power based on maximum power point tracker (MPPT) implementation. The dynamic behavior of the proposed model is examined under different operating conditions. Solar irradiance, temperature and wind speed data is gathered from a grid connected, 28.8kW solar power system located in central Manchester. Real-time measured parameters are used as inputs for the developed system. The proposed model and its control strategy offer a proper tool for smart grid performance optimization.