Abstract This paper deals with a model of photovoltaic (PV) array or battery operated DC/DC boost converter fed three-leg VSC (Voltage Source converter) with star delta transformer for power quality improvement. A synchronous reference frame theory is proposed for three-phase four-wire DSTATCOM (Distribution Static Compensator) which includes voltage source converter and a dc link capacitor. The proposed DSTATCOM provides reactive power compensation, source harmonic reduction and neutral current compensation at the point of common coupling (PCC). The PV array or battery operated boost converter is used to step up the voltage to match the DC link requirement of the three-leg VSC. The main advantage of this proposed approach is that, it will provide continuous compensation for the whole day. The star/delta transformer provides isolation to the VSC and path to the zero sequence fundamental as well as harmonics neutral current. To derive the reference current in order to generate the firing pulse to the VSC, the overall system is designed, developed and validated by using MATLAB–SIMULINK environment.