The paradigm of an electric power system is shifting from a system that is centralized, synchronous, carbon-based, with a one-way power flow and a passive distribution system to a system that is decentralized, converter-based, low-carbon, with bidirectional power flow and an active distribution system. Therefore, the concept of a microgrid will play a significant role in the operation of a future power system. The thesis is focused on developing a dynamic microgrid model in DIgSILENT PowerFactory software package. The dynamic microgrid model consists of converter-based generation, converter-based energy storage and various dynamic power system load models. The thesis explores state-of-the-art converter control schemes to provide system ancillary services while ensuring dynamic stability during the transition to off-grid mode as well as stable operation in off-grid mode. Special emphasis is on the virtual inertia-based converters (virtual synchronous generator, synchronverter and virtual synchronous machine) that emulate the characteristics of the traditional synchronous machines, such as the inertial response and damping effect. The generation units and energy storage systems are connected to the observed microgrid through the converters managed as the virtual synchronous machine (VSM). The control structures of the converters are described in the detail. This thesis provides simulations that verify the ability of the VSM converters to operate in grid-connected and islanded mode. They also ensure the smooth transition between these two operation modes. In addition, the response of the VSM converters is compared to the response of the grid-following converters, whose control structures are based on the available models in the PowerFactory. This thesis shows the possibility of supplying the microgrid load by energy production only from renewable energy sources.