In islanded operation mode of microgrid

it is difficult for the distributed generation（DG） units with conventional droop control to share the load according to their rated capacities

due to the mismatched line impedance of different units. Consequently

we propose an improved droop control scheme on the basis of the line impedance observer. Firstly

an observer is designed to identify the parameters of line impedance based on local measurement; it also adds a voltage observer to eliminate impact caused by the external voltage disturbance. Secondly

based on the estimated value of line impedance

an improved droop control is proposed to reduce the power sharing error among different distributed generation units. Finally

the simulation model is built on MATLAB/Simulink. The simulation results demonstrate that the real value of line impedance is able to be accurately estimated by the observer designed in this paper. The proposed droop control based on the estimation result of line impedance can effectively compensate the voltage drop caused by the mismatched line impedance

and greatly reduces the sharing error among the different DGs

which make DG to share the reactive power in a reasonable way. The proposed droop control has good dynamic and steady performances and ensures the capability of DG’s plug-and-play.