In this paper, a physical model for a distributed generation (DG) system with power quality improvement capability is presented. The generating system consists of a 5 kW PEM fuel cell, a natural gas reformer, hydrogen storage bottles and a bank of ultra-capacitors. Additional power quality functions are implemented with a vector-controlled electronic converter for regulating the injected power. The capabilities of the system were experimentally tested on a scaled electrical network. It is composed of different lines, built with linear inductances and resistances, and taking into account both linear and non-linear loads. The ability to improve power quality was tested by means of different voltage and frequency perturbations produced on the physical model electrical network. (C) 2008 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights reserved.