Abstarct: Rapid development of renewable energy resources and distributed generation namely photovoltaic systems has led to underscore of challenges in power quality, reliability and stability. One of this main challenges is control of micro grids in the time of grid faults. In this thesis control of photovoltaic systems under the condition of faults in grid has been addressed. Harmonic and voltage sag compensation and control of power quality are done using series and parallel compensators. The control algorithm of parallel compensators are baxsed on the generalized theory of instantaneous power. In active series compensator the unwanted voltage harmonics are eliminated and in parallel compensator the current harmonics are treated. Using this configuration distorsion of voltage and current are eliminated and in case of occurrence of a voltage sag in the grid side, voltage will remain constant on load. This configuration has an economic advantage over separate compensator system and PV inverter since it will use one less imverter. A new maximum power point tracking algorithm baxsed on approximating maximum current and using two control loops.This method has been simulated and successfully satisfies needs of the system.