A voltage sag compensation system includes a capacitor charging and discharging module connected to an AC rectifier and to an inverter, a two stage voltage detector configured to detect a degree of voltage sag that is present on a power line, and an inverter gating module selectively connectable to the power line in response to the two stage voltage detector and configured to provide gating signals to the inverter. The system further includes a low DC bus switch out module configured to monitor an output voltage of the capacitor charging and discharging module and to disable the inverter gating module from providing the gating signals to the inverter when voltage associated with the capacitor charging and discharging module falls below a predetermined value.