The modernization of distribution grids developed the power systems towards the smart grid. The microgrid plays a vital role in an improving power systems area, which refers to the loads operated under an organized and synchronized way and the distributed energy resources. The microgrid, which is operated in "islanded"mode, should be connected to the main power grid, or it must be entirely off-grid. Bipolar hybrid microgrid feeds local loads with local resources because it consists of both DC and AC bus simultaneously. The converter, which is used for microgrid application, plays an important role, which is said to be Interlinking Converter (ILC). The lower order harmonics can be eliminated by these ILCs. By reducing the THD and increasing the dc-link voltage utilization SVM is used. In this paper, there will be an increase in system performance and great reliability with a fully automated system. There will be a decrease in switching losses, current ripple and THD of grid current by the use of a new switching modulation method, which is validated by the Matlab simulation results. © Published under licence by IOP Publishing Ltd.