During the last two decades, renewable wind energy has become increasingly popular as a consequence of strong ecological concerns and appealing advantages with regard to economical energy solutions in remote communities. Furthermore, with very large wind farms emerging, the dispersed renewable wind energy is required to be fully connected to the electrical distribution networks. However, the integration of dispersed renewable wind energy will pose a great challenge to the power quality in the distribution networks when the weak nature of the grid in remote areas and the uncertainty of wind are taken into consideration.This paper presents a novel Modulated Power Filter Compensator (MPFC) for the distribution networks with dispersed renewable wind energy interfaced. A tri-loop error driven controller is used to adjust the PWM switching of the modulated power filter compensator. Full power factor correction and power quality improvement is validated under different operation conditions, like load switching and wind velocity excursions. The MPFC device is a member of novel FACTS based compensators developed by the first author.