Increased green energy presence in distribution power networks can resolve rising energy demands while also reducing fossil fuel consumption, as well as providing economic and technical merits. However, the quantity of power delivered to customers cannot be allowed to take precedence over the quality of that electricity. This is because the high penetration of the renewable-based power generation comes at the cost of power quality (PQ) deterioration, especially at the point of common coupling (PCC), owing to nonlinear characteristics of renewable-based distributed generation (DG) systems and precontamination of modern distribution grids. So, the function of PQ improvement technologies unavoidably comes into the picture when the hosting capacity (HC) of renewable energy systems is constrained by any of the grid PQ performance indices. This paper investigates the application of a hybrid active power filter (HAPF) to improve the harmonic-constrained HC (HC-HC) of renewable DG systems in harmonically polluted distribution systems. A shunt type HAPF designing to achieve maximum HC-HC is considered as an optimization problem and solved by the firefly algorithm under several constraints the system particularly related to individual and total harmonic distortion limits in line current and voltage at PCC, harmonic currents overloading of distribution feeder. Aside from harmonics, constraints related to voltage rise and drop limits, as well as power factor, are also taken into account to ensure the optimal use of the HAPF as a compensator. The proposed HAPF-based HC-HC improvement approach's findings and efficacy are compared to those acquired from one of the literature's recently proposed techniques. Besides, the study is extended for HC-HC enhancement by HAPF, under changing the utility-side's background voltage distortion and the load-side's nonlinearity level conditions.The performed extended investigation of the system shows that HC-HC enhancing the effectiveness of the proposed approach is rather less susceptible to utility or customer side contribution to background distortion at the PCC.