Recent advances in power electronic technology for interfacing dispersed energy resources to distribution grids offer potential solutions to several technical and economical problems in distribution networks. In particular, Dispersed Generation (DG) can be used to provide the usual energy service as well as some ancillary services, such as load following, back-up service, and compensation of Power Quality disturbances. In this paper, a fuel cell-based DG system is proposed for providing energy and ancillary services. The novelty of the system is that it can operate with a ‘system strategy’ (aimed at compensating for the disturbances in the whole system or in some privileged areas of the network) thanks to a suitable control technique of the power electronic interfaces. In this way, the benefits of using the dispersed generation system are maximized. Computer simulations were performed on an actual distribution grid to demonstrate the effectiveness of the compensation actions.