Distributed generation systems (DGSs) have been getting more and more attention in terms of renewable energy use and new generation technologies in the past decades. The self-excited induction generator (SEIG) occupies an important role in the area of energy conversion due to its low cost, robustness and simple control. Unlike synchronous generators, the SEIG has to absorb capacitive reactive power from the outer device aiming to stabilize the terminal voltage at load changes. This paper presents a novel static VAR compensator (SVC) called a magnetic energy recovery switch (MERS) to serve as a voltage controller in SEIG powered DGSs. In addition, many small scale SEIGs, instead of a single large one, are applied and devoted to promote the generation efficiency. To begin with, an expandable mathematic model based on a d-q equivalent circuit is created for parallel SEIGs. The control method of the MERS is further improved with the objective of broadening its operating range and restraining current harmonics by parameter optimization. A hybrid control strategy is developed by taking both of the stand-alone and grid-connected modes into consideration. Then simulation and experiments are carried out in the case of single and double SEIG(s) generation. Finally, the measurement results verify that the proposed DGS with SVC-MERS achieves a better stability and higher feasibility. The major advantages of the mentioned variable reactive power supplier, when compared to the STATCOM, include the adoption of a small DC capacitor, line frequency switching, simple control and less loss.