In order to utilize the energy from the renewable energy sources, power conversion system is necessary, in which the voltage source inverter (VSI) is usually the last stage for injecting power to the grid. It is an economical solution to add the function of power quality conditioning to the grid-connected VSI in the low-voltage distribution system. Two multifunctional VSIs are studied in this paper, that is, inductive-coupling VSI and capacitive-coupling VSI, which are named after the fundamental frequency impedance of their coupling branch. The operation voltages of the two VSIs are compared when they are used for renewable energy integration and power quality conditioning simultaneously. The operation voltage of the capacitive-coupling VSI can be set much lower than that of the inductive-coupling VSI when reactive power is for compensating inductive loads. Since a large portion of the loads in the distribution system are inductive, the capacitive-coupling VSI is further studied. The design and control method of the multifunctional capacitive-coupling VSI are proposed in this paper. Simulation and experimental results are provided to show its validity.