The global energy consumption is increasing day by day. This increased energy demand can only be fulfilled through large-scale renewable energy integration. This article presents the mathematical modeling, control, and integration of a bio-fuel prime mover fed self-excited induction generator (SEIG) for medium voltage direct current (MVDC) ship power system. A three-phase current controlled voltage source inverter (VSI) working as a static synchronous compensator (STATCOM) injects compensating currents at the point of common coupling (PCC) for harmonic elimination and regulation of the generated voltage under varying load. The VSI is connected at the PCC through a three-phase zig-zag/star transformer which reduces the voltage stress at the DC link. An indirect current technique based controller is used to generate gating pulses for the STATCOM. The MVDC load zone is modeled as an integral sliding mode controlled DC-DC converter feeding ship service loads in shipboard system. Hardware realization of the proposed system has been implemented with 3.7kW induction generator.