Power quality issues in industrial grids such as voltage sags, swells and short interruptions have an economic impact and are therefore a challenge to the industry. Further on the grid infrastructure gradually experience a change to more decentralized power supply due to the further increasing penetration of renewable energies especially in middle- and low-voltage grids. With the objective to increase the reliability and quality of supply a modular shunt-connected Power Conditioning System (PCS) is developed. The general concept and topology of the modular PCS including respective filter design aspects are presented. This paper focuses on a cascaded state-based control strategy to regulate the PCC voltage. Simulation results show the dynamic performance of the chosen control strategy, particularly the mitigation of voltage sags, power factor correction and harmonic current compensation.