Inverter driven, inertia-less interface of a large photovoltaic (PV) source with power grid raises challenging penetration issues such as bus voltage fluctuation, active power variation, reactive power flow and poor system dynamics. Extensive efforts are underway to overcome these issues, which tend to put a limit on the maximum PV power injection capability for a given local area electric power system. This paper proposes a new control scheme that enables a centralized PV-grid system to damp out the low frequency power swings on the local area network as an ancillary activity apart from its regular function. The proposed scheme enhances the power system stability without incorporating any additional devices or systems (e.g., PSS). The analytical basis of the control law used in this scheme is derived from the structure preserving energy function (SPEF) model. A notable feature of the scheme that makes it highly feasible is that it requires only locally measurable signals. Further, it does not affect the MPPT control of the PV system in any manner. All these features make it highly relevant and suitable for smart grid applications. Relevant simulation results as well as key experimental results for a laboratory level hardware model are included. © 2010-2012 IEEE.