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The development of a Battery Energy Storage System (BESS) is considered to be very important for peak shaving and power demand normalization, especially in an autonomous power system. This paper presents a control scheme based on a cascade of an external controller that regulates the active and reactive power to generate reference currents and an internal current controller which produces gating signals for the inverter semiconductor switches. The proposed control algorithm takes the state of charge (SOC%) of the battery system into account and implements an active power command override to satisfy the requirements of the SOC% limits of the batteries. System simulations are performed during discharging and charging modes of operation as well as during the active power command override mode for several power demand step variations. The evaluation of the results shows good system performance and dynamic behavior.