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Although installation of DG in distribution system has many advantages but improper installation may leads to several adverse effects on the existing system. The effect of DG on the distribution system can be categorized into: technical, economical and operation impacts.
Key Words: Distributed Generation, Reliability
Reliability of a power system has been an important parameter for the researchers. Reliability of a power system depends on the several factors.
For fulfilling the extra demand during peak hours a DG can be connected to the grid. Generally DG is defined on the basis of its size and location but some countries define distributed generation as having some basic characteristic (for example, using renewable, cogeneration, being non-dispatchable, etc.).
The US Department of Energy (DOE) defines DG as follows: "Distributed power is modular electric generation or storage located near the point of use. Distributed systems include biomass-based generators, combustion turbines, thermal solar power and photovoltaic systems, fuel cells, wind turbines, microturbines, engines/generator sets, and storage and control technologies . Distributed resources can either be grid connected or independent of the grid. Those connected to the grid are typically interfaced at the distribution system" [ 1 ].
Nevertheless, the following definition is generally agreed in the literature for DG: "A generating plant connected directly to the grid at distribution level voltage or on the customer side of the meter" .
Further-more, in the literature, terms such as embedded generation, dispersed generation, distributed energy resources or DER and decentralized generation, have also been used in the context of DG. The term dispersed generation is usually referred to a distributed power generation unit regardless of the technology, and whether it is connected to the grid or completely independent of the grid .
The above definitions do not specify any criterion or classification of DG based on their capacity. Although, there is no generally accepted rule or standard, the following ratings are used in different countries and situations:
The DOE considers distributed power systems to typically range from less than a kilowatt (kW) to tens of megawatts (MW) in size as DG unit .
According to the Gas Research Institute, typically between 25 kW to 25 MW generation units are considered as DG .
In New Zealand, generating units of capacity less than 5 MW are usually considered DG .
The Electric Power Research Institute (EPRI), considers small generation units from a few kW up to 50 MW and/or energy storage devices typically sited near customer loads or distribution and sub-transmission substations as distributed energy resources .
Swedish legislation treats generating units under 1500 kW differently from those unit capacities higher than 1500 kW. Then, it can be considered that DG capacity in Sweden is defined as those units under 1500 kW .
In the English and Welsh power markets, a power plant with capacity less than 100 MW is not centrally dispatched. Therefore, in this market DG is referred to any generating unit under 100 MW .
In Australia, generating units under 30 MW are considered as DG .
Several International Organizations also tried to define the distributed generation. According toÂ International Council on Large Electric SystemsÂ or Conseil International des Grands Réseaux Électriques (CIGRE),  distributed generation can be defined as all generation units with a maximum capacity of 50MW to 100MW, that are usually connected to the distribution network and that are neither centrally planned nor dispatched.
The IEEE , on the other hand, defines distributed generation as the generation of electricity by facilities that are sufficiently smaller than central generating plants so as to allow interconnection at nearly any point in a power system.
Energy Agency, in turn, sees the distributed generation as units producing power on a customer's site or within local distribution utilities, and supplying power directly to the local distribution network.
Distributed generation (DG) is the strategic placement of small power generating units (5 kW to 25 MW) at or near customer loads .
Distributed energy resources are small-scale power generation technologies (typically in the range of 3 to 10,000 kW) located close to where electricity is used (e.g., a home or business) to provide an alternative to or an enhancement of the traditional electric power system .
Some researchers also tried to define the distributed generation.  Defines distributed generation as a small source of electric power generation or storage (typically ranging from less than a kW to tens of MW) that is not a part of a large central power system and is located close to the load. Distributed generation can be defined as relatively small generation units of 30MW or less, which are sited at or near customer sites to meet specific customer needs, to support economic operation of the distribution grid, or both .
In [12-13], authors conclude that the distributed generation can be defined in terms of connection and location rather than in terms of generation capacity.
Distributed generation is the integrated or stand-alone use of small, modular electricity generation resources by utilities, utility customers, and/or third parties in applications that benefit the electric system, specific end-user customers, or both. 
Considering the different definitions of DG  concluded that the distributed generation is a source of electric power connected to the distribution network or to the customer site which is sufficiently smaller than central generating plants.
A distributed generation system may use renewable or non-renewable source of generation and can be grid connected or stand alone system.
Due to low investment cost and small size Distributed generation plays an important role in power system planning. The introduction of DG to distribution system can significantly impact the flow of power and voltage conditions at customers and utility equipment. These impacts may be either positively or negatively depending on the distribution system operating characteristics and the DG characteristics , .
Positive impacts are generally called "system support benefits," and include - :
Improved utility system reliability
Voltage support and improved power quality
Transmission and distribution capacity release
Deferments of new or upgraded transmission and distribution infrastructure.
Easy and quicker installation on account of prefabricated standardized components.
Lowering of cost by avoiding long distance high voltage transmission.
Environment friendly where renewable sources are used.
As the number of distributed generation systems increases in the system these also raises the new maintenance and security issues. These issues may be technical, operational and economical . Some of the issues can be discussed as follows:
A. Effect on Power Quality: Depending on the aspect chosen, distributed generation can either contribute to or deteriorate power quality . Frequency is one of the important parameter of the power quality. Installation and connection of DG to existing grid will definitely affect the system frequency.
According to  the impact on the local voltage level of distributed generation connected to the distribution grid can be significant.
B. Effect on Protection System: In radial network without DG power flow is unidirectional but parallel connection of DG with the existing grid increases the possibility of the bidirectional power flow this may cause the unbalance in the existing system. The extent at which protection coordination is affected depends on the size, type and location of DG . For avoiding major modification on the existing feeder  suggests that capacity of the DG should be 5% of the existing capacity of the line.
Hence new protection system is required for the modified system. According to  new protection requirements can be grouped as generating unit protection, distributed network protection and interface protection.
Reclosing of the Switch is another issue with the distributed generation. If speed of reclosing of switch is slower than this may increase the duration of fault and may lead to other serious faults .On the other hand if reclosing speed is higher than it may be reclosed before complete disconnection of DG and may damage the DG. It thus need to be found a balance between degraded supply quality due to longer off times and potential damage to DG .
C. Effect on the Reliability: Reliability is one of the important characteristics of power system that consists of security and adequacy assessment. Both of them are affected by implementation of distributed generation in electrical distribution system . The time necessary to start-up the DG should be taken into account for the reliability evaluation of the distribution system including DG. If this time is sufficiently short, the customers suffer a momentary interruption, while, if not, they suffer a sustained interruption .
D. Effect on Voltage Regulation: Power injections from DG change the direction of flow of power. In case of minimum demand and maximum generation at the DG system voltage level at the load centers may increase above the permissible limits.
E. Power Conditioning Issues: Some distributed generation technologies produces the DC power and for connecting the DG with existing grid this DC power is need to be converted into the AC power. This conversion from DC to AC may introduce the harmonics in the supply although this concern with modern technology inverters is less .
F. Effect on Power Loss: Line losses are directly related with the efficiency of the system. Higher losses will cause the poor efficiency of the system. Line losses can be decreased by reducing either line current or resistance or both. When DG is used to provide energy locally to the load, line loss can be reduced because of the decrease in current flow in some part of the network. However, DG may increase or reduce losses, depending on the location, capacity of DG and the relative size of load quantity, as well as the network topology and other factors .
G. Islanding: It occurs whenÂ distributed generator (DG) continues to power a location even thoughÂ electrical gridÂ power from theÂ electric utilityÂ is disconnected. Islanding can be dangerous to utility workers, who may not realize that a circuit is still powered, and it may prevent automatic reconnection of devices. Islands are not inherently harmful to distribution systems and in some cases intentional islanding is done for the maintenance purpose.
One of the major problems with islanding is that it is often caused by faults that occur between the DG and the substation, which often results in relays opening at different times to remove fault current and results in a loss of phase and voltage synchronization. The loss of synchronization can result in large transients when a recloser operates to reconnect the island and can then result in false tripping , .
A. High Investment cost: Distributed generation is less competitive to other conventional technologies in terms of cost.  claims that one of the major remaining issues is the relatively high capital costs per kW installed power compared to large central plants.
B. Low Transmission Losses: The amount of energy lost in transmitting electricity is reduced because the electricity is generated near to where it is used, sometimes even in the same building. This also reduces the size and number of power lines that need be constructed.
C. Regulating Power Markets
The purpose of the regulating power market is the correction of deviations from the schedule, i.e., the provision of additional electricity if frequency decreases, and reduction of electricity generation if the frequency increases. It depends on national market design when actors have the last possibility to correct their schedules on other markets - day ahead or as close as 15 minutes ahead. In general, it is assumed that variable supply sources as most DG increase the demand for regulating power due to meteorological forecast errors .
The participation of DG could be positive to overcome assertions of non-competitive markets .
D. Impact on electricity price: Distribution companies and large customers, who buy electricity directly from the markets, may install their own DG systems to fulfill their electricity demand partially. Due to this they will purchase less power from the grid and this will reduce their costs. By installing more DG units, market participants can cope with the variation in the price during peak demand hours. The market price is affected by the ability of customers to choose between power from the grid or from their own DG units, resulting in a reduction of market power by generation companies .
E. Deferred Investment: In distribution system planning and expansion, especially where demand growth is low and the system is operating at its marginal resources, DG installations can be a practicable solution to defer upgrades .
A. Regulatory: In the absence of a clear policy and associated regulatory instruments on the treatment of DG, it is very unlikely that this type of generation is going to thrive. In order to foster the required changes, there is a clear need to develop and articulate appropriate policies that support the integration of DG into distribution networks .
B. Output Power Uncertainty: Distributed Generation units using renewable sources of energy are supply dependent. This issue becomes serious if contribution of DG is higher in overall capacity. In case of Denmark deals are settled 24hour in advance on an hourly basis. This means that the owner of a wind farm must know up-front how much he will produce every hour of the next day . In such condition if there is any wrong forecast then balance energy need to be purchased for compensating the difference between agreed and actual production.
Today lack of prediction exactness can be compensated by combining the renewable DG with storage facility .
C. Storage Needs: Due to forecasting problems associated with the renewable energy sources need of storage system rises in DG system. Storage system may use Batteries, Flywheels, Supercapacitors, Super Conducting Magnetic Energy Storage Systems etc.
D. Operational Mode: Many DG systems are flexible in nature and hence they can be operated in Standby or Peak Shaving mode. Making use of DG allows a flexible reaction to electricity price evolutions. DG then serves as a hedge against these price fluctuations . Operating mode of DG should be monitored continuously so that that it can be changed according to the demand.
E. Dispatched Operation: In context of renewable sources of energy dispatched operation means whether a generator can be shut off or not. In case if forecasting is not accurate and storage devices are not working then it should be possible to turn on or off the generator as per the demand of the network. Thermal or hydro generator are well controlled hence are dispatched and on the other hand renewable generator depends on the inflow of the driving energy .
This paper has presented an overview of the key issues concerning the integration of distributed generation into electric power systems that are of most interest to the stakeholders (power system planners and operators, policy makers and regulators, DG developers and customers) in the electrical energy supply industry today.