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Ideally, electric utilities are required to supply sinusoidal voltage at constant rated frequency while end users need to receive a sinusoidal current with good power factor. Electrical power distribution systems are already experiencing distortion of the current due to the usage of non-linear power electronic loads in industrial and commercial applications. Further, the integration of intermittent hybrid renewable sources like solar and wind to the utility grid through 4-leg 3-phase 4- wire current controlled voltage source inverter (VSI) leads to cause still more current distortion which pollutes the quality of electric power at the end users. Thus power quality is a critical issue to be addressed effectively. The active power filter (APF) is advantageous over passive filter due to its capability for better harmonic compensation features. This paper presents analysis of shunt active filter (SHAF) using a PI controller with and without the incorporation of intermittent hybrid renewable sources under different grid conditions. An instantaneous real and reactive current (id-iq) control scheme for SHAF is proposed for reduction in harmonic levels. The MATLAB/Simulink simulation studies validates the performance of id-iq control method. IMPROVEMENT OF HARMONIC CURRENT COMPENSATION FOR GRID INTEGRATED PV AND WIND HYBRID RENEWABLE ENERGY SYSTEM