A wind turbine power converter is disclosed herein that smooths the output power from a variable speed wind turbine, to reduce or eliminate substantial power fluctuations on the output line. The power converter has an AC-to-DC converter connected to a variable speed generator that converts wind energy to electric energy, a DC-to-AC inverter connected to a utility grid, and DC voltage link connected to an electrical energy storage device such as a battery or a fuel cell, or a photovoltaic or solar cell. Also, an apparatus and method is disclosed herein for controlling the instantaneous current flowing through the active switches at the line side inverter to supply reactive power to the utility grid. The inverter can control reactive power output as a power factor angle, or directly as a number of VARs independent of the real power. Reactive power can be controlled in an operating mode when the wind turbine is generating power, or in a static VAR mode when the wind turbine is not operating to produce real power. To control the reactive power, a voltage waveform is used as a reference to form a current control waveform for each output phase. The current control waveform for each phase is applied to a current regulator which regulates the drive circuit that controls the currents for each phase of the inverter. Means for controlling the charge/discharge ratio and the regulating the voltage on the DC voltage link is also disclosed.