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This paper presents the development of a single-phase utility-interactive inverter for residential power generation to meet the specifications laid down for the 2005 Future Energy Challenge Competition sponsored by U.S. DOE and IEEE. The proposed inverter system is capable of working in both stand-alone and grid-connected mode. A control scheme for implementing both modes of operation is presented, which has simple structure with smaller number of sensors. The proposed control algorithm including the whole system control is implemented on a low cost, fixed-point DSP TMS320F2812. The experimental results from a 1 kW prototype show that the proposed inverter system exhibits not only low THD grid current during the grid-connected mode and well regulated inverter voltage during the stand-alone mode, but also smooth and automatic transfer between the two modes of operation.