The advent of renewable energy sources and their power management in microgrid (MG) systems have seen significant changes recently. Efficient and reliable power management is one of the key strategies in developing microgrid systems. This paper studies and analyzes the microgrid system with an optimal power flow (OPF) algorithm-based power management method. The proposed OPF will work as a centralized controller, enhance the switching between energy sources, dynamic loads, batteries and main grid to ensure efficient, reliable and sustainable power management and enhanced performance for the microgrid system. Microgrids are technologically advanced systems that are incorporated with different types of energy sources which connect and disconnect the sources with the main grid based on the system condition. In other hand, microgrids with uncontrollable energy sources and loads can have variation in power flow. The rapid changes in the system will lead to poor power quality. The system contains a solar PV, a battery energy storage system (BESS), an electric vehicle (EV), main grid and dynamic loads. optimal power flow receives inputs from microgrid system and target output to optimize stability, reliability and efficiency in power quality. Simulations were carried out based on MATLAB/Simulink and the OPF used as a centralized controller and the results obtained enhanced the power quality of microgrid systems. The system was analyzed in three different scenarios, in normal condition, abnormal condition of solar PV and abnormal condition of batteries. Hence, the proposed OPF enhanced the power quality, optimized performance of switching between energy sources and main grid.