In this paper, a second-order Volterra filter is used in association with Lyapunov's stability theory to generate the reference currents for a SPV-DSTATCOM (solar photovoltaic-distribution static compensator) system in the distribution system. The SPV-DSTATCOM system is integrated to the grid to compensate a nonlinear load while supplying SPV active power to the grid. The system is implemented on a developed prototype, under balanced, unbalanced loading conditions and variable insolation conditions. The system has a fast response. Moreover, the harmonic distortion of the grid currents is observed under the IEEE-519 standard.