Abstract: It is important to improve voltage stability of hybrid generation system based on renewable energies by using automatic excitation units in pico-hydro generation system. Based on the mathematical model, an equivalent dynamic model of a pico-hydro power generation system including hydro turbine, synchronous generator, automatic excitation system was created in ElectroMagnetic Transient Program/Alternative Transient Program (EMTP/ATP) software package. Case study was carried out to investigate the operational characteristics of pico-hydro system under fault conditions in a micro grid. Simulation results showed that the automatic excitation regulation and control system could improve the voltage stability by increasing excitation current rapidly as low voltage occurs during fault conditions.