In this work, a ‘smart solar inverter’ based on current controlled three level NPC VSI is proposed. The proposed inverter exchanges the available solar power with the grid efficiently and also ensures quality of power at the point of common coupling (PCC). This solar inverter which also works as shunt active filter is controlled with space vector based hysteresis current controller (SVHCC). This type of configuration can fulfill requirements to maintain standard power quality for medium voltage applications. When enough solar power is available, the two-stage power converter working at maximum power point can send the excess photovoltaic power to the electric grid and also compensates the harmonic currents in loads connected at PCC. In the absence of solar power, the converter can work for the power quality improvement including power factor correction. Both Instantaneous Power (IRP) theory and Synchronous Reference Frame (SRF) theory are considered in this work for creating the reference current for the VSI. The current errors in the three phases are controlled by unified manner using space vector based approach. Through simulation studies the proposed scheme is verified under different loading conditions.