This paper demonstrates a novel method to establish robust control and stability of microgrid connected with photovoltaic (PV) grid tie inverter, battery storage with bidirectional inverter, and diesel generator. The proposed control scheme enables optimum power sharing among the sources based on the changes in generation due to intermittent nature of PV source and level of energy stored in battery. Power flow control has been achieved by varying the active power generated by the PV inverter as a function of the system frequency in the islanded mode of operation. Detailed analysis has been carried out in MATLAB/Simulink tool and the captured results are found to effective and same has been confirmed with hardware prototype setup with PV inverter and bidirectional battery charger. © Springer Nature Singapore Pte Ltd. 2018.