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This paper presents a new method for controlling the exchange of power between a single-phase distributed generation system and the grid. Rather than controlling the active and reactive powers separately and through the media of current signal as is done by the conventional techniques, the proposed controller acts directly on the instantaneous power. This eliminates the conventional need for calculating the active and reactive powers; a calculation that involves filtering/phase-shifting and slows down the system responses and adds to computational complexity. This paper first formulates a nonlinear structure from a purely mathematical approach based on minimizing a cost function. The minimization procedure generates a reference for the current signal which is subsequently used in the current control loop. This paper then derives an equivalent linear counterpart for the nonlinear structure. Moreover, it is also shown that the idea of controlling the instantaneous power does not require a separate loop for the current. Having replaced the nonlinear part with its linear equivalent, a control loop that comprises linear time-varying elements is obtained. This paper further develops a linear time-invariant model of the loop for stability and design purposes. The proposed control system is successfully applied to a photovoltaic system and performance evaluation results (using computer simulations and a laboratory experimental setup) are presented. Desired performance and robustness of the proposed method is verified by testing it within different operating conditions.