A method for compensating self-induced voltage variations includes computing a first reactive power value (Q1), obtaining a voltage value at a point of interconnection (POI) between at least one power source and a power grid, comparing the voltage value with one or more pre-defined voltage limits, computing at least one compensation factor (CF) corresponding to at least one portion of the first reactive power value (Q1) based on an output of the comparison between the voltage value and the one or more pre-defined voltage limits, computing a second reactive power value (Q2) as a function of the at least one portion of the first reactive power value (Q1) and the at least one CF, generating a reactive power compensation command based on the computed second reactive power value (Q2), and transmitting the reactive power compensation command to a power converter.