The power source in micro-grid (MG) is either atmosphere dependent source (e.g. wind generator, solar etc.) or it will be small hydro or diesel turbine. This introduces power quality concerns in MG. It is because of small power number (MW per Hz.) due to limited size of the system and limited resources for system stability. In this paper, a new application of the UPFC is introduced. The slightly modified UPFC can be used to improve the voltage profile of the micro-grid with or without grid connectivity. The proposed method will address the voltage stability concern in the MG using modified UPFC in low and medium voltage system. ©2010 IEEE.