I. Voltage source inverter (VSI): It is a power electronic system consists of switching devices (IGCTs, IGBTs, GTOs), which can generate a sinusoidal voltage at any required frequency, magnitude, and phase angle. It converts dc voltage to ac to regulate the load.

II. Voltage injection transformer: This transformer connects the DVR to the distribution feeder and couples the injected compensated voltage to the incoming supply voltage. VSI supplies AC voltage which is further stepped up by using injection transformer to the desired voltage level. It is either connected in star or delta winding.

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III. Output filter: It removes out the harmonics contained in the output of the VSI. Its location can be kept either at the inverter side or at the HV side of the transformer. Placement of filter at the inverter side, prohibits switching harmonics to enter into the injection transformer thereby reduces voltage stress on it.

IV. Energy storage unit: It provides the required real power to generate compensating voltage. Energy storage devices can be lead acid batteries, flywheels, dc capacitors, super capacitors and dc voltage source. The system with large disturbance requires real power compensation.

V. Control unit: Control circuit steadily monitors the system. Its function is to detect any disturbance or faults in the system. Then it compares the distorted voltage with reference voltage and generate the switching command signals for VSI in order to generate the compensating voltage by DVR