In this paper, a static distribution compensator (DSTATCOM) is implemented to control a distributed power generation system using a control technique based on the proposed composite observer. The problem of power quality is a phenomenon that manifests itself as a non-standard voltage, current, or frequency that causes a malfunction or malfunction of the end-user's equipment. Public utility distribution networks, sensitive industrial loads and critical business operations suffer from various types of interruptions and outages that can lead to significant financial losses. The proposed control technique is used for extracting fundamental components from deformed load currents. These extracted components are used to estimate the currents of the reference source to generate gate signals from DSTATCOM. The proposed control technique is implemented to reduce reactive power, harmonic distortion and load distribution under linear / non-linear loads. The performances of DSTATCOM are considered satisfactory for these consumption loads with a regulated generator voltage at the common coupling point and a self-supporting DC connection of the DSTATCOM voltage generator.