Failure of any sensor involved in the operation of shunt active power filter (SAPF) not only degrades its performance but also deteriorates power quality. The purpose of the proposed technique is to eliminate load current, dc voltage, and filter current sensors, thus reducing the hardware cost of SAPF. In addition to the load and filter current sensor reduction, this article proposes a new dc voltage estimation technique, which will be used to eliminate the dc voltage sensor present in conventional SAPF. The proposed dc voltage estimation technique is based on model reference adaptive system (MRAS). A comparative analysis of the conventional SAPF (i.e., including all sensors) is performed with the proposed sensor reduction method to verify the effectiveness of the proposed method. Stability and sensitivity analysis of the estimation technique is performed in detail. The proposed work is simulated on the MATLAB/SIMULINK platform under various load conditions and disturbances. Further, it is validated on OPAL-RT 5700 platform.