The continuous growth of Renewable Energy (RE) in the grid reduces system inertia and damping, impacting the overall stability of power systems. To alleviate this issue, “virtual” inertia can be provided by power electronics converters. Under this functionality they are controlled to emulate the behavior of rotating machines, operating as Virtual Synchronous Generators (VSGs). However, grid-connected inverters are susceptible to voltage and frequency disturbances which negatively affect their performance. Therefore, this paper introduces a Unified Power Flow Controller (UPFC) with VSG functionality that can compensate for voltage variations at the point of common coupling and provide a constant voltage reference for the connection of remote RE systems. The detailed controlled strategy together with the small-signal analysis are also developed in this work. The UPFC-VSG is compared with an equivalent Static Synchronous Compensator (STATCOM) with centralized energy storage also under VSG control to illustrate the major benefits of the UPFC-VSG. Validation of the analysis and the proposed control method is provided through simulation of a UPFC-VSG and a STATCOM-VSG supporting the grid-connection of a 100-MVA RE system.