In a grid-integrated photovoltaic system (GIPVS), there exist issues such as surplus active power and inadequate performance of maximum power point tracking (MPPT). A surplus active power causes the overvoltage problem at the point of common coupling in low- or medium-voltage grid during the peak hours of power generation. Additionally, the inadequate performance of the MPPT algorithm results in power loss due to high settling time during the sudden change of irradiance. Therefore, to solve the surplus power problem, the curtailment of active power is suggested with improved MPPT algorithm under variable irradiance conditions. In this paper, a derated power generation mode (DPGM) control strategy is presented for the curtailment of active power. Additionally, a drift-free (named as modified) perturb and observe (P&O) technique is also proposed to improve the performance of the MPPT algorithm. Consequently, the DPGM control scheme with the intermediate boost converter shaves the surplus active power during the peak hours of power generation. Furthermore, the modified MPPT algorithm deals with the fluctuation of irradiance during non-peak hours. Thus, the proposed control scheme delivers in a more efficient system during the peak hours of power generation. In addition, it reduces the power loss and settling time during the change of irradiance for non-peak hours. Based on the proposed control scheme, a 30 kW system has been simulated in MATLAB/Simulink using Simpower tools under different environmental conditions.