This paper proposes an adaptive control for grid connected photovoltaic (PV) system that allows for the active power injection (API) and active power filtering (APF) functionality while allowing the maximum utilization of the PV inverter. This PV system operates in three modes: (i) API only, (ii) API and APF with the full utilization of PV inverter VA capacity, and (iii) API and APF with specific total harmonic distortion (THD) limit for the injected currents. The maximum power point tracking (MPPT) is achieved with perturb and observe method. The proposed algorithm calculates the peak fundamental, harmonic current and then as per the available PV inverter capacity, modifies this value for the full utilization of PV inverter. Adaptive linear neuron (ADALINE) based online Fourier analysis is used to estimate the fundamental and harmonics components of the load and injected currents. The operation of the single stage PV inverter system is analyzed with the proposed control modes for two different atmospheric and load conditions.