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Distributed energy resources (DER) with a power electronics inverter interface can provide both active power and nonactive power simultaneously and independently. A decoupled control algorithm of active power and nonactive power is developed based on the instantaneous active power and nonactive power theory. A current limiter is combined to the control algorithm, and it ensures that the inverter is not overloaded. During the normal system operation, the active power has higher priority over the nonactive power so that the energy from a DER can be fully transferred to the grid. Within the inverter's capability, nonactive power is provided to the grid as required. With this control algorithm, the inverter's capabilities are taken full advantage at all times, both in terms of functionality as well as making use of its full KVA rating. Through the algorithm, the inverter's active power and nonactive power are controlled directly, simultaneously, and independently. Several experimental results fully demonstrate the validity and effectiveness of this new control algorithm. As evidenced by the fast dynamic response that results, a DER system with the control algorithm can provide full services to the grid in both steady state and during transient events.