Objectives: In this paper, dynamic performance of Wind Energy System (WES) comprising of Squirrel Cage Induction Generator (SCIG) is analyzed for grid connected operation with DSTATCOM. Methods/Statistical analysis: In the present work, modeling, analysis and working of a low voltage distribution system supported with wind energy conversion system is analyzed. A Distribution STAtic COMpensator (DSTATCOM) has been modeled and simulated using MATLAB. The effectiveness of the proposed system has been verified by simulation and analytical results. The indirect current control technique is employed for present analysis as it is simple, robust and favourable as compared to other methods. Findings: The DSTATCOM improves the performance of Wind Energy System (WES) under transient condition i.e. change in wind speed and sudden change in load. The DSTATCOM augmented with wind energy system addresses the power quality and grid stability issues. Application/Improvements: The DSTATCOM in present study provides transient voltage support and also maintains the stability of a WES.When wind penetration increases beyond 30%, the system loses stability. A detailed simulations study is carried out on the application of DSTATCOM to improve the stability of the system