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In this paper, comparative study between wavelet transform (WT) and S-transform (ST) based on extracted features for detection of islanding and power quality (PQ) disturbances in hybrid distributed generation (DG) system is presented. The hybrid system consists of DG resources like photovoltaic, fuel cell, and wind energy systems connected to grid. The negative sequence component of the voltage signal is used in islanding detection of these resources from the grid. Voltage signal extracted directly at the point of common coupling is considered for detection of PQ disturbances. Further, the effect of variation of grid impedances on islanding and PQ disturbances and effect of islanding on the coherency between the energy resources is also presented in this paper. The study for different scenarios of DG system is presented in the form of time-frequency analysis. The energy content and standard deviation of ST contour and WT signal is also reported in order to validate the graphical results. The results demonstrate the advantages of S -transform over WT in detection of islanding and different disturbances under noise-free as well as noisy scenarios.