A new UPQC(unified power quality conditioner), which consists of series inverter, shunt inverter, dc/dc converter, and energy storage, is proposed. The proposing UPQC can compensate reactive power, harmonics, voltage sag and swell, voltage unbalance, and voltage interruption. The control strategy for the proposing UPWQC was derived using the instantaneous power method. The performance of proposing system was analyzed by means of the EMTDC/PSCAD simulation and the experimental work with the hardware prototype. The proposing UPQC has the ultimate capability of improving power quality at the point of installation on power distribution systems or industrial power systems and can be utilized for the custom power device in the future distribution system.