Penetration of WE sources into the weak AC grid with low X/R ratio in the presence of unbalanced loads is a major cause of poor power quality (PQ). In such a scenario, WE penetration with higher levels becomes a significant challenge in the utility grid. This paper presents a solution to mitigate power quality issues in the weak grid to minimize the effect of low X/R ratio at a higher level of WE penetration using distribution static compensator (DSTATCOM) controlled by a least mean fourth (LMF) algorithm. This control algorithm extracting the active and reactive weight component of the unbalanced load current to estimate reference signals, which helps to generate gate pulses for DSTATCOM. The LMF algorithm has been tested successfully for maintaining voltage stability and PQ at a higher level of WE penetration in the weak grid. © 2020 IEEE.