Summary
The integration of distributed energy resources (DERs) with conventional systems emerges as an intelligent solution for providing uninterrupted and secure power even at times of high load demand. Better load management with a mature fault handling mechanism makes AC a viable option which has an efficiency of 78.24%. In contrast with less power loss and slightly better efficiency of 84.6%, DC microgrid is a reliable option in a low power environment. In order to accommodate all operating conditions and load types, a hybrid system can be designed with a theoretical efficiency of more than 90%. Bidirectional power flows, low inertia, the transition between different modes of operations are the challenges for the protection of alternating current (AC) and direct current (DC) microgrid systems. Power balance fluctuation, absence of zero‐crossing currents, selection of suitable grounding, and coordination between different rating devices restrict the hybrid system to achieve the said efficiency constantly. This paper reviews in detail of existing protection along with grid‐connected algorithms for both modes of operation. Finally, the limitation, major hurdles, and future course of action for a reliable, efficient, and secure hybrid grid system are figured out.