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Renewable energy sources, the most reasonable fuel-shift taken over the naturally limited conventional fuels, necessarily deal with the self-sustainable microgrid system rather than the traditional grid distribution system. In practice, the microgrid system experiences the challenge of instability due to the Constant Power Load (CPL) from many electronic devices. In this paper, AC microgrid stability, besides the stability analysis and pole zero movement, is thoroughly investigated for each and every considerable parameter of the system in order to improve the stability scenario. After demonstrating all cases regarding the instability problem, the storage based virtual impedance power compensation method is introduced to retain the system stability and extend the loading limit of the microgrid system. Here, in this proposed method, both the active and reactive power compensation techniques are suggested for a potential solution. Besides this, a PID controller is implemented to maintain the constant terminal voltage of CPL via current injection method from storage. All the cases and results are rigorously scrutinized in the virtual platform such as MATLAB/Simulink with appreciable aftermaths. Hardware implementation of the proposed method is also conducted to find out its effectiveness.