Conventional grids are being replaced by smart grids nowadays to improve the transmission efficiency and to incorporate the recent power electronics based compensation devices. The proposed system deals with the voltage compensation using BIST, battery and PV cell for smart grid applications, which has three stages high voltage high frequency bidirectional AC/DC rectifier, bidirectional DC/DC dual active bridge converter and bidirectional DC/AC inverter. This paper mainly focuses on the voltage balancing of DC link which lies between DC/DC converter and DC/AC inverter by connecting two DC sources viz. PV and battery across the capacitor. In order to maintain a constant voltage across the DC link, a droop control with droop curve is proposed for battery and BIST. With this power management system, typical case studies have been analyzed using MATLAB simulation and it was verified with the prototype hardware.