This paper presents design, analysis and simulation performance of an active power controller for stable and reliable operation of a micro-grid system. Power balance between generation and consumer is a critical issue for stable and reliable operation of the micro-grid systems. This issue becomes more critical when a micro-grid system contains stochastic nature distributed generations such as wind and solar because their output power changes non-uniformly. In order to achieve accurate and fast power balance in such a micro-grid system, power in the system has to be regulated continuously. Such an objective can be achieved using droop based alternating current control technique. Because the droop characteristic employed into the developed controller initiates determining the power deviation in the system which is continuously regulated by controlling the current flow into dump power resistors. The designed controller is simulated for the operation of a micro-grid system in stand-alone mode under various operating conditions. The simulated results show the ability of the developed controller for stable and reliable operation of the microgrid that contains renewable sources. The experimental development of the micro-grid system and the testing of the developed active power controller are presented in PART II of this paper.