The document proposes a new control algorithm and topology for a distribution static compensator (DSTATCOM) that allows it to operate in voltage control mode even under a stiff source. A stiff source has negligible feeder impedance, making it difficult for a DSTATCOM to regulate voltage using conventional control schemes. The proposed solution connects an external inductor between the load and source, creating a point of common coupling. A DSTATCOM at the load can then indirectly regulate voltage by controlling the voltage across the inductor. The control algorithm generates reference voltages that also control source currents to be balanced, sinusoidal and in phase during normal operation. This provides fast voltage regulation during disturbances while maintaining the benefits of current control mode during normal operation,