The grid interconnection of renewable energy source is a popular issue in the electric utilities. Different types of converter topology in grid interconnection have been improved by researchers to improve power quality and efficiency of the electrical system. The main contribution of this paper is that shunt hybrid active power filter (SHAPF) with a DC-DC converter at dc link is to provide interconnection between renewable source and grid with linear dynamic loads. The other contribution of this paper is to present a novel control strategy for reactive power compensation and harmonics elimination in industrial networks using a hybrid active power filter as a combination of a three phase, two level voltage source converter connected in parallel with single tuned LC passive filter. In proposed control method, reactive power compensation is achieved successfully with perceptible amount. Besides, the performance results of harmonic compensation are satisfactory. Theoretical analyses and simulation results are obtained from an actual industrial network model in PSCAD. The simulation results are presented for proposed system in order to demonstrate that the harmonic compensation performance meets the IEEE-519 standard.