Microgrid systems have been adopted globally to implement the renewable energy-based electrification, but the CPL has caused instability issues. To improve the stability of the microgrid system, a virtual impedance-based load side compensation technique is used. In this paper, to implement this storage-based compensation technique, the hybrid energy storage system (HESS), with a battery unit as well as ultracapacitor unit, is introduced to reduce the deficiency in the case of using either battery-only or ultracapacitor-only storage system and offer the combined features with higher energy and higher power density. Here, the storage will provide high power density with quick charglng/discharging time and the ultracapacitor will compensate the transient demand for a short period of time; therefore compensating the required power by the combined features of its constituents. Besides HESS is operated by a simple implementable algorithm, it improves overall efficiency, cost effectiveness, life span; reduce the energy storage size and stress on the battery.