An increased electricity demand and dynamic load changes are creating a huge burden on the modern utility grid, thereby affecting supply reliability and quality. It is thus crucial for modern power system researchers to focus on these aspects to reduce grid outages. High-quality power is always desired to run various businesses smoothly, but power-electronic-converter-based renewable energy integrated into the utility grid is the major source of power quality issues. Many solutions are constantly being invented, yet a continuous effort and new optimized solutions are encouraged to address these issues by adhering to various global standards (IEC, IEEE, EN, etc.). This paper therefore proposes a concept of establishing a renewable-energy-based microgrid cluster by integrating various buildings located in an urban community. This enhances power supply reliability by managing the available energy in the cluster without depending on the utility grid. Further, a “fuzzy space vector pulse width modulation” (FSV-PWM) technique is proposed to control the inverter, which improves the power supply quality. This work uniquely optimized the dq reference currents using fuzzy logic theory, which were used to plot the space vectors with effective sector selection to generate accurate PWM signals for inverter control. The modeling/simulation of the microgrid cluster involving the FSV-PWM-based inverter was carried out using MATLAB/Simulink®. The efficacy of the proposed FSV-PWM over the conventional ST-PWM was verified by plotting voltage, frequency, real/reactive power, and harmonic distortion characteristics. Various power quality indices were calculated under different disturbance conditions. The results showed that the use of the proposed FSV-PWM-based inverter adhered to all the key standard requirements, while the conventional system failed in most of the indices.