This paper describes a DC isolated network which is fed by distributed generation (DG) from photovoltaic (PV) renewable sources to supply unbalanced AC loads. The battery energy storage bank has been connected to the DC network via DC/DC converter called storage converter to control the network voltage and optimize the operation of the PV generation units. The PV units are connected to the DC network via its own DC/DC converter called PV converter to ensure the required power flow. The unbalanced AC loads are connected to the DC network via its own DC/AC converter called load converter without transformer. This paper proposes a novel control strategy for storage converter which has a DC voltage droop regulator. Also a novel control system based on Clarke and Park rotating frame has been proposed for load converters. In this paper, the proposed operation method is demonstrated by simulation of power transfer between PV units, unbalanced AC loads and battery units. The simulation results based on PSCAD/EMTDC software show that DC isolated distribution system including PV units can provide the balanced voltages to supply unbalanced AC loads. (C) 2008 Elsevier Ltd. All rights reserved.