Unlike traditional power grids, smart grids have the advantage of bidirectional power flow and having distributed generations. Distributed generation systems are usually supplied by renewable sources which can cause unpredicted voltage fluctuations as a result of being intermittent. While traditional compensating devices deal with the problem of voltage fluctuation and reduced power quality with a long response time, inverter based photovoltaic systems can supply the required reactive power for the system to remain stable having a short response time and less thermal losses than typical compensators. When the insolation is weak or at nights, the reactive power capability of voltage source inverters can be used to improve the system efficiency. The challenge here is to keep the inverter DC link input voltage within an acceptable bandwidth for the inverter to be able to continue its operation when there is no active power provided by the PV cells. This paper proposes a controlling system to completely use the nominal apparent power capacity of the PV inverter that is to use the inverter capacity to provide reactive power when the active power is not nominally supplied by the PV system. Simulation studies are carried out in MATLAB/SIMULINK to verify the effectiveness of the proposed method.