Hybrid Energy System (HES) is becoming popular as it is identified as the most safe, sustainable, and long-term option for energy management. The grid-connected power network is vulnerable to frequent interruptions, which can lead to instability and a huge blackout. Furthermore, the presence of switching devices in industrial and domestic applications causes disturbances such as voltage swell/sag, waveform distortion, interruptions, impulsive voltage, and so on. Dynamic voltage restorer, known as a modern power compensating device, is cost effective, compact in size and can handle more energy capacity than DTSATCOM and UPFC. Hence for addressing the power quality issues in hybrid solar photovoltaic (PV)-proton exchange membrane fuel cells (PEMFC) system, dynamic voltage restorer (DVR) has been designed in this paper. As the fuzzy logic technique can provide flexible solutions in the case of uncertainty, fuzzy logic-based controller has also been employed with DVR to regulate the firing pulses of a PWM generator. Based on the simulation results obtained using fast fourier transform (FFT) analysis in MATLAB/Simulink, the dynamic performance of HES against the most important contingency condition or three phase faults is analyzed in detail. Further, the impact of DVR on power quality improvement under severe fault has also been demonstrated in this research work. On analyzing the total harmonic distortion (THD) values of HES under heavy disturbances, the fuzzy controlled dynamic voltage regulator (FCDVR) is identified as an efficient control mechanism for enhancing power quality in grid-connected HES.