The intermittent property and increased grid restrictions have become the most critical elements for increasing penetration levels of clean renewable energy sources (RESs). Smart inverters with combined RESs integration and reactive power support for utility grids have recently found widespread applications due to their techno-economic benefits. In smart inverters, the distribution-static compensator (DSTATCOM) functionality is inherently integrated to the RESs inverters. However, optimized reactive power-sharing between these inverters has become a big issue for the control systems of utility grids. There are numerous existing attempts presented in the literature for addressing these challenges, although they disadvantage low efficiency, uneven sharing, complex implementations, and/or costly added devices. Therefore, this paper proposes an efficient reactive power dispatch method between hybrid renewable energy generation and energy storage systems. The proposed method enhances the energy efficiency of the utility grid by adopting the reactive power share between interfacing inverters according to the estimated power losses. Besides, the proposed method enhances the reliability of smart inverters by relieving their thermal stresses through adopting their reactive power share according to the estimated power losses. The hybrid photovoltaic (PV) generation with superconducting magnetic energy storage (SMES) systems is selected as a case study for validating the new proposed reactive power dispatch method. The results, comprehensive discussions, and performance comparisons have verified the superior performance of the new proposed reactive power dispatch method. INDEX TERMS distribution static compensator, photovoltaic (PV), reactive power dispatch, smart inverters, superconducting magnetic energy storage (SMES)