The electric power generation from renewable energy sources like wind energy has increased in recent years due to environmental problems and the shortage of conventional energy sources in the near future. More and more wind farms are being integrated into power system grid. Integration of large scale of wind farms into power system presents challenges such as voltage and reactive power control, frequency control, grid stability and power quality. This paper demonstrates the power quality problems due to integration of wind turbine with the grid. In this proposed scheme, STATic COMpensator (STATCOM), with decoupled control of d and q current components, is connected at a point of common coupling with a battery energy storage system to reduce the effect of power quality issues. The STATCOM with decoupled control of d and q current components control scheme is employed for the grid connected wind energy conversion system is simulated using MATLAB/SIMULINK. The effectiveness of the decoupled control of d and q current components control scheme is, it takes care of the reactive power requirement of the load and the induction generator and thus improving the source side power factor and there will be a marked reduction in the Total Harmonic Distortion.