This paper presents the unified power quality conditioner (UPQC) performance while interconnecting with photovoltaic (PV) modules in unbalanced and distorted distribution systems. The proposed configuration consists of UPQC and PV modules connected to a DC-link capacitor. The PV modules evacuated power without losing the UPQC fimctions of compensating reactive power, load current harmonics, unbalanced load current and voltage sag/swell. The uncontrollable switching states in the conventional hysteresis control method are mitigated using fixed switching frequency of neutral current control. The performance of the proposed interconnected system is analysed using simulations with MATLAB/Simulink. © Institution of Engineers Australia, 2013.