The expansion of renewable energy is continuing powerfully. Electrical system ought to transmit power with diminished loss, improved power quality, and reliability while pleasing the need of customer’s load demand. Nevertheless, owing to the exhaustion of fossil fuels and their environmental impact, the availability of quality, stable, and reliable power in developing countries is worrying. Integrating a solar-wind based microgrid to the distribution network is the more feasible and best alternative solution to gratify the customer intensifying power demand while seeing the strict environmental regulations of generating power. However, the microgrid system connected in a distribution network has diverse problems and challenges. The problems comprise the development of voltage sag and swell, voltage unbalance, and power losses because of the intermittent nature of PV and wind resources. The objective of this study is to integrate microgrid system with STATCOM (static synchronous compensator) controller to ensure the higher power flow with enhanced voltage profile and reduced power loss. MATLAB/PSAT is used to model microgrid and STATCOM controller connected to the grid. Proportional integral (PI) and fuzzy logic controllers (FLC) are also applied to control the STATCOM. The effectiveness of STATCOM with microgrid integration is tested by connecting to the main distribution system using standard IEEE 30-bus system. Finally, it was observed that STATCOM raises the capacity of the distribution line and contributes to voltage profile improvements and power loss reduction.