This paper deals with a hydro-SPV (Solar Photovoltaic) based microgrid which consists a voltage source converter (VSC) for maintaining voltage and frequency of the system and a bidirectional converter is used for controlling the battery charging/discharging and maintaining the DC-link voltage at SPV MPP (Maximum Power Point) voltage. The proposed system performs many functions such as MPPT, SPV energy feeding in the battery and to the load according to circumstances and voltage-frequency (VF) control. A four–leg VSC and bidirectional converters are used for maintaining the voltage and frequency of the system, harmonics elimination, neutral current compensation and load levelling. A sinusoidal tracer based control algorithm is applied to VSC for maintaining the frequency and voltage when load changes. This system is used to manage the power flow and to reduce the capacity of battery approximately 10–20%. The proposed microgrid is modeled in MATLAB Simulink and its performance is simulated to demonstrate the system capability to control the system voltage and frequency.