This paper introduces a novel sensorless control approach for a three-phase grid-connected voltage source inverter utilized in a renewable energy conversion system. Renewable energy conversion applications are beginning to require a faster response to the changing power demands of the grid. Therefore, the methods that are based on conventional power theory can no longer comply with the speed requirements because they require low-pass filters in order to generate the power feedback. The closed loop control is based on an instantaneous power approach using real-time values to calculate the reference currents. Thus, the control system has fast tracking of power references compared to conventional methods. In addition, the proposed approach uses a sliding-mode observer to estimate the inverter output current as well as the grid current. This sensorless approach makes the control system robust against measurement noise and phase error, and it reduces system costs. The state-of-the-art PR controller is employed in order to provide zero steady state error for the inverter currents as well as disturbance rejection. Theoretical analysis and simulation results are provided in order to demonstrate the validity and effectiveness of the proposed control method.