nowadays, renewable energy sources such as solar photovoltaic (PV) and wind energy systems play a significant role in electricity generation. However, these systems are highly dependent on real-time and forecasted weather conditions, leading to variability and intermittency in power output. Such fluctuations create challenges in maintaining stability, thereby increasing the demand for efficient energy transmission and distribution systems. This paper proposes a novel smart grid approach for enhanced power system operation. A Static Synchronous Compensator (STATCOM) is employed to improve power quality, regulate power flow, mitigate harmonics, and provide reactive power compensation. A quasi-Z-Source Inverter (qZSI)-based STATCOM is integrated with a three-phase four-wire (3P4W) distribution system. The proposed compensator utilises a combined qZSI and photovoltaic (PV) configuration for effective switching operation. To control the compensator, an Adaptive Frequency Fixed Second-Order Generalised Integrator (AFF-SOGI) is implemented. Furthermore, a Fuzzy Logic Controller (FLC) is used to optimise the parameters of the Proportional Integral (PI) controller, namely Kp and Ki. The system performance is evaluated based on various parameters, including voltage, current, active and reactive power, and behaviour under non-linear load conditions. The results demonstrate improved power quality, enhanced stability, and efficient energy management in the proposed solarwind hybrid smart grid system.