Today’s stochastic grid system is experiencing huge voltage fluctuations, which is responsible for power quality issues in the smart microgrid network due to its intermittent nature as well as penetration of hybrid renewable resources. Thus, the dynamic performance evaluation and their control are essential to sustaining the stability of the grid network. A d-q controller mechanism is suggested to maintain the balance of the distributed generation network and grid side network. A dynamic control mechanism of voltage source converter (VSC) is presented in the MPPT-based wind power generating station, where an induction generator generates the power by the optimal control of the wind energy-based subsystem. The distributed hybrid generation (solar PV and wind) subsystem’s output terminal is linked to the DC bus bar’s common link via the VSC. A VSI is utilized to convert the desired DC power to alternating current power. To regulate and improve the performance of the proposed hybrid power generating systems (HPGS), a supercapacitor (SC) is used to smooth out the ripple on the distribution side in the power grid. Furthermore, the dynamic stability of grid-connected solar PV and wind power generation systems is investigated. This article also proposed an effective control scheme for the SC in HPGS under the influence of weak grid conditions. This article aimed to validate the efficiency of the VSI topology; a PI controller stability enhancement approach is used in a proposed grid system under various disturbance conditions. Finally, the simulation results and FFT-based power quality response analysis are validated through the effective utilization of an SC.