In this paper, a conventional thermal power plant with single stage reheat turbine is taken into consideration. It is equipped with AVR, IEEE type dual input PSS3B and integral controlled AGC loop. A hybrid distributed generation (DG) system consisting of wind turbine generators, aqua electrolyzer, fuel cells, diesel engine generator, flywheel energy storage system and battery energy storage system is configured. This hybrid DG system is integrated with the grid connected thermal unit. The different tunable parameters of this integrated power system are optimized by a novel craziness-based PSO with wavelet mutation (CRPSOWM), developed by the authors. While integrating the DG with the thermal power system, improved transient performance is noticed. Further improvement in the transient performance is observed with the usage of capacitive energy storage unit in the AGC loop of conventional power generation scheme. The proposed CRPSOWM incorporates a wavelet-theory-based mutation operation and offers robust and promising results.