This paper suggests an innovative control architecture based on hybrid instantaneous theory (HIT) decoupled method for improved power quality (PQ) in a photovoltaic (PV) based microgrid utilizing energy storage devices (ESD). Further, to enhance the PV-ESD performance, an eleven-level cascaded inverter (ECI)with compact size, cost, and increase in voltage level is proposed. By considering the simplicity in design and wider application, an improved perturb and observe (IP&O) method is implemented to operate the PV-ESD system at its optimum power point (OPP). In addition to that, for achieving an improved energy management, a battery-based ESD is integrated into the system. Furthermore, the use of grid LCL filter in PV is investigated with the proposed control law design to reduce the harmonic content. To verify the robustness of the HIT approach based on the harmonics and nonlinearity, various test conditions have been examined under different cases ranging from varying environmental conditions, varying grid demand and ESD charging and discharging situations by using MATLAB/Simulink software.