Microgrids are increasingly being considered to provide electricity for the expanding energy demand in the grid distribution network and grid isolated areas. However, the technical challenges associated with the operation and controls are immense. Management of dynamic power balances, power flow, and network voltage profiles imposes unique challenges in the context of microgrids. Stability of the microgrid during both grid-connected and islanded mode is considered as the major challenge during its operation. Traditional control methods have been employed are based on the assumption of linear loads. For instance the concept of PQ, voltage and frequency control through decoupled PQ are some of very useful when considering linear loads, but they fall short when considering nonlinear loads. The deficiency of traditional control methods of microgrid suggests that more research in the control of microgrids should be done. This research aims at introducing the dq technique concept into decoupled PQ for dynamic load demand control in inverter interfaced DG system operating as isolated LV microgrid. Decoupled PQ in exact mathematical formulation in dq frame is expected to accommodate all variations of the line parameters (resistance and inductance) and to relinquish forced relationship between the DG variables such as power, voltage and frequency in LV microgrids and allow for individual parameter control (frequency and line voltages). This concept is expected to address and achieve accurate control, improve microgrid stability and power quality at all load conditions.Sida from Sweden