Power systems all over the world have been under development towards microgrids integrated with renewable energy-based distributed generation. Due to the intrinsic nature of output power fluctuations in renewable energy-based power generation, the use of proper energy storage systems and integrated real-time power and energy control schemes is an important basis of sustainable development of renewable energy-based distributed systems and microgrids. The aim of this paper is to investigate the characteristics and application features of an integrated compound energy storage system via simulation and a small-scale hardware system implementation. This paper first discusses the main components, working principles and operating modes of the proposed compound energy storage system. Then, a detailed design example composed of supercapacitors, batteries, and various controllers used in two typical application scenarios, peak demand shaving and power generation smoothing, of a grid-connected microgrid is systematically presented. Finally, an experimental setup with proper power converters and control schemes are implemented for the verification of the proposed control scheme. Both simulation and implementation results prove that the proposed scheme can effectively realize desired control objectives with the proposed coordinated control of the two energy storage devices.