This paper proposes a mode transition algorithm between the grid-tied and the stand-alone operations for the single-phase inverter with the energy storage system. For the grid-tied operation, the dc-link voltage and the output current are required to be control. For the stand-alone mode, both the output voltage and the output current should be regulated. In order to mitigate a falling-off in control performance during transients in mode change, the load power estimation and the current selection schemes are proposed. The proposed method allows an optimized current reference is selected to reduce an output voltage drop and an excessive over-current in transient. To verify the effectiveness of the proposed method, both the simulation and the experiments for a 3kW single-phase inverter with the energy storage system have been conducted. From the results, it has been confirmed that the proposed method reduces a transient error as well as implementing smooth mode transition.