An implementation of a series interconnection scheme for small distributed generation systems is presented in this thesis. The concept uses one set of voltage source converter to control the injected voltage magnitude and phase angle for power injection and voltage sag mitigation. Because of the use of series interconnection scheme, the energy storage device outputs vary concurrently with the line loading and provides loading leveling functions. Under voltage sag situations, it provides missing voltage to effectively deal with power quality problems. The control algorithm uses the reference voltage tracking concept. A signal phase 484 VA prototype of the proposed system is implemented. The performance of the proposed method is simulated and verified by using Matlab-simulink package and the implemented module.