Passive power filters (ppfs) are a well-known low-cost solution to compensate the power system harmonics in industrial and commercial consumers but, it has a limitation of resonance effect due to dynamic load variation. to overcome this limitation shunt active power filters (sapfs) are came into existence over past two decades. however, the major limitation of sapf is high power rating requirement for compensating high peak harmonic current. therefore combination of ppfs and sapf is constituted as hybrid apf (hapf), which is the best alternative approach to minimize the power rating of the filter. these hapfs are classified as shunt active and series passive, shunt passive and series active and shunt active and shunt passive. according to the need of the consumer and harmonic pollution severity the hapf combinations are selected. among the aforementioned combinations of hapf, shunt passive and shunt active is one of the economical solution in terms of power rating requirements. however, the reference current generation system, current controller are the major segments in hapf design to compensate wide range of harmonics (such as sub harmonics, inter-harmonics, supra harmonics), reactive power and unbalance currents. in this research work a shunt active and shunt passive power filter configuration is further improvised to enhance the power quality and reliability of the industrial and commercial consumers. various reference current generation schemes and its associated control strategies are reported for hapf over past two decades, but still, the reference current generation and the current controller design is suffering from certain limitations, such as computational burden, sensitive under the distorted grid and poor dynamic behavior due to resonance effect caused by the ppfs. the instantaneous active and reactive (pq) and synchronous reference frame (srf) theories are widely adopted reference current generation schemes for hapf applications. however, srf theory is the most frequently used methodology for harmonic, reactive power and unbalance compensation when compared to pq theory because of the less computational burden. however, selective estimation of disturbing effect is not possible with srf theory. the selective estimation of disturbing effect is needed in the case of hapf design to perform effective compensation without resonance effect. given different limitations involved in reference current generation by the existing power decomposition methods, conservative power theory (cpt) proposed by p.tenti et al., is identified by the author as one of the accurate current decomposition methods for hapf to control the harmonics in low-voltage distribution grid. cpt has better features, such as accurate estimation under ideal and non-ideal grid voltages with a selective estimation of a disturbing effect. cpt based orthogonal current decompositions enable selective estimation of different pq issues such as harmonics, unbalances, and reactive power. the cpt based current decomposition instead of digital filters used in the srf improves the reference current generation accuracy to extract the desired component of the current. the distortion associated with the energy storage element is considered in the reactive energy definition of cpt, which is not considered in the existing power decomposition theories. the void currents definition based on the cpt is influenced by harmonic distortion and unbalance effect. cpt is capable of calculating the optimum compensation capacitance’s value under ideal and distorted conditions. thus, cpt is the most suitable reference current estimation scheme for hapf design. usually, the proportional and integral (pi) controller is the most widely used linear controller for current control operation, but it has a poor dynamic response for the load variations. hence in this research work, a type-ii controller is designed to perform the current control task for cpt based hapf as per the requirements of cea regulations of 2013 and ieee 519-2014. the cpt based type-ii current controlled hapf is modelled in matlab/simulink 2013 environment and implemented in real-time using opal-rt based op 4500 real-time reconfigurable fpga based embedded system.