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Distributed energy resources (DE) have been widely used in the power systems to supply active power, and most of the present DE resources are operated with limited or without nonactive power capability. This paper shows that with a slight modification in hardware configuration and a small boost in the power ratings, as well as proper implementation of control strategies, a DE system with a power electronics converter interface can provide active power and nonactive power simultaneously and independently. A DE can provide dynamic voltage regulation to the local bus because of its nonactive power capability. Furthermore, the proposed DE control method in this paper can effectively compensate the unbalance in the local voltage. The system requirements such as the inverter current rating and the dc voltage rating are discussed. The analysis of the system requirements to provide nonactive power shows that it is cost-effective to have DE provide voltage regulation.