An advanced method of analysis for grid-connected PV systems is developed in this research. To investigate the issues which may arise in the clustered PV systems, a "Demonstration Project on Clustered PV Systems" was initiated in December 2002 in Oota, Japan, involving the installation of more than 500 residential PV systems in the demonstrative research area, and the development of battery-integrated PV systems to avoid restrictions on output power due to the raising of the grid voltage. The annual performance of commercial PV systems without battery was analyzed and a performance ratio of 80% on average was found to have been achieved. Overvoltage of power distribution lines and snow are two major factors capable of causing very low performance ratio on a daily basis. The effects of batteries have also been analyzed, and the results indicate that there will be some reduction of energy losses due to the grid voltage, but the PCS efficiency will be at least 8% worse than that of commercial PV systems. It was also found that nonoptimized battery operation sometimes results in a fully charged situation at noontime and maximum reverse power flow may not be minimized in this situation. (c) 2008 Wiley Periodicals, Inc.