The capacitive-coupled grid-connected inverter (CGCI) system is proposed in this paper. It can reduce the active power from the grid by injecting active power from the PV generators into the grid. The reactive power and harmonic compensation ability of the CGCI leads to reduced root-mean-square (RMS) value of source current and thus reduced residential power loss. The proposed CGCI and conventional inductive-coupled grid-connected inverter (IGCI) are compared. Results indicate that CGCI can achieve the required power delivery with lower inverter voltage rating. The proposed CGCI is utilized to integrate a PV generation system to the grid. Besides, reactive power and harmonic compensation is achieved simultaneously when the active power is injected. A dynamic reactive power adjustment block is added to the control system of the CGCI, which can improve its performance when the required reactive power compensation exceeds its control capability. Simulation results are provided to verify the validity of the CGCI and its control system.