Economical cost of energy consumption plays an important role in power distribution system. So, different kinds of custom power devices (CPD) are used to have shrinking financial issues. The purpose of using CPD devices is to supply useable power by reshaping into a smooth AC waveform. The different power quality (PQ) solutions like power to the grid with low harmonics, voltage balancing, Unit power factor (UPF) correction, and better voltage regulation which needs high power inverters with higher competence. MLI (Multi-level Inverter) topology is used to synthesize multilevel waveform. In this paper three level and fifth level inverter topology are implemented in DSTATCOM (Distributed Static Compensator) for satisfactory compensation performance. From this comparision, level of inverter, THD reduction and other issues are analyzed. Simulation results using MATLAB/Simulink with sim power tool box, emphasize the capability of the fifth level VSI over three level VSI.