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A new inverter control approach, called enhanced virtual synchronous machine (eVSM), is proposed based on the VSM concept. Unlike existing VSM approaches, the eVSM does not emulate the rotating inertia based on an assumption of the unlimited energy storage, but it deploys the physically existing inertia of the dc-link element. The eVSM adopts an innovative way of enlarging the inertia utilization range, which obviates the need for having a large dc-link element or a dedicated battery storage system, while still providing the same inertia response of an equivalent synchronous machine. Theoretical developments and numerical results presented in this paper confirm that the proposed eVSM can present a stabilizing support to the grid similar to a synchronous machine despite the small size of its dc-link element. Moreover, its transient responses can be improved beyond those of conventional synchronous machines thanks to the possibility of more flexibly adjusting damping and governor functions. [ABSTRACT FROM AUTHOR]