In power distribution network, more and more people are worried about equipment failures and malfunctions caused by fluctuating loads and system harmonics due to poor power quality. The presence of harmonics can shorten the equipment's service life. There is a strong link between the energy use and the environment. Major part of power demand is supplied from thermal power stations which produce more carbon emissions as the power plant uses more fuel to generate the electricity. The effective utilization of transformer capacity is achieved by minimizing system losses and improving voltage regulation in the distribution system. Many techniques are used to address this issue, ranging from several power factor correction systems to passive and active harmonic filtering. Although distribution static compensator (DSTATCOM) is a perfect solution to solve this problem, they are expensive and have more complexity as a view against static var compensators (SVCs). This study aims to provide optimal approach for SVC switching in unbalanced operation of the distribution networks. In present work, the SVC is arranged in thyristor binary switched capacitors (TBSC)-thyristor-controlled reactor (TCR) configuration. The capacitor banks are set in binary sequence, and the optimal size reactor is decided. The TCR in SVC inherently generates the harmonics. The fuzzy logic approach is used to solve this non-linearity by determining the optimal triggering delay angle of the thyristor in TCR. This results in significant reduction in harmonics injected by the SVC. The strategy is appealing to improve efficiency of power distribution networks and thereby save natural resources required to generate electricity from thermal power stations.