Wind energy is a resource that does not require any fuel or feedstock to be treated, refined or transported. It does not produce air pollution and hazardous waste. Because of these, wind energy, one of the major renewable energy sources, has been widely used in recent years. In this work, a three-phase distribution static synchronous compensator (D-STATCOM) is demonstrated for power quality enhancement in wind energy distribution systems. A five-level cascaded inverter is used to implement the D-STATCOM. D-STATCOM is controlled to compensate the reactive power, balances the load and eliminate harmonics. A novel control algorithm is based on the indirect current control system with synchronous reference frame theory for generating the gating pulses of Voltage Source Inverter (VSI). This proposed control system has one model predictive controller and two modified fuzzy logic controllers. The performance of the three-phase D-STATCOM is validated for power quality enhancement with different loads through software implementation using Matlab/Simulink environment. The effectiveness of the proposed approach is verified through simulation studies.