Operational Performance in transmission, optimization of the hybrid, reliability of the system and efficiency of the transmission are key characteristics of the hybrid grid systems. In our paper, an integrated model of hybrid grid-connected Photo-Voltaic and Wind Turbine system is developed and an accurate reactive power compensator for the same is also developed. Management of Reactive Power is defined as the improvement of the power factor value so that we can cease the generation of reactive power. The concept of Reactive Power compensation is related to issues faced in power quality but in general, reactive power compensation can be done by considering in two parameter i.e. load compensation and voltage support. In load compensation, the aim is to increase the power factor of the system thus real power in the system can be increased. In Voltage support, the aim is to reduce the harmonic at the output due to fluctuating supply. Our proposed system comprises photovoltaic array, wind turbine, induction generator, controller, converters and capacitor bank. The reactive power compensator model is designed by using Ansys 14 software package and the same is implemented by using MATLAB software package. Perturb and Observe algorithm is used for maximum power point tracker (MPPT). Thus the behavior of our proposed model is tested under various operational parameters. Our proposed model and control technique implemented offers a smart tool for hybrid grid transmission system which good optimization in its performance.