In this paper, a novel three-phase four-wire photovoltaic system is proposed for the compensation of harmonic, reactive and three-phase unbalance in the distribution network and the demand for renewable energy generation. A novel three-level DC/DC converter is adopted for photovoltaic arrays and energy storage, and its control method, modulation strategy and neutral-point potential imbalance suppression method are given. Three-phase four-wire diode-clamped three-level converter is adopted for the bidirectional grid-connected converter. In order to realize power quality condition and active power bidirectional flow, an improved reference current calculation method is proposed, and the grid-connected current tracking control method is analyzed. Based on the theoretical analysis, the photovoltaic system is modeled and simulated by MATLAB/Simulink, which verified the feasibility and validity of the novel scheme.