This paper proposes the essential operating modes and control scheme for large capacity, centralized PV-grid systems to overcome the penetration issues. The injected PV power is considered comparable to the existing feeder capacity with typical loads on the line. Various control techniques are proposed to achieve full flexibility of operating mode selection by the operator/Load Dispatch Center (LDC) to overcome major PV penetration problems of active power sharing, voltage fluctuation, reactive power support and system instability. A major outcome of this work is that it empowers the operator to deal with these complex PV penetration issues by facilitating precise active power control, reactive power control, AC bus voltage regulation, active power sharing and economical load dispatching. New control philosophy for the boost converter and the voltage source inverter (VSI), which constitute the conventional PV-grid interface, is proposed under different operating modes. Major and essential modifications in the conventional power and control circuits and need for additional bi-directional control signals are highlighted and incorporated. These advance control features allow the utility to interface huge capacity PV plants with the power grid and reduce the burden on conventional power plants, without causing system malfunction on account of voltage variation, impact of passing clouds, reactive power demand, intermittent active power, etc. A linearized small-signal model of the PV-grid system is derived to design the controller of the boost converter and tuning the PI regulator of the VSI. Simulation results for critical conditions are presented showing the effectiveness of the proposed control scheme under various operating modes. © 2011 IEEE.