Abstract
California is striving to increase penetration of Distributed Generation (DG) to 33% by 2020. This effort is to promote energy independence of the state of California and to lead the country to be more environmentally conscious. However, integrating DG and increasing penetration to high levels will negatively impact the grid. One issue that has been discussed is that DG may supply more power than is demanded by the load. This may cause overvoltage issues at the buses where the DG is connected and also may cause power to flow from the distribution to the transmission system. Current legislation dictates DG to operate at unity power factor and prohibits DG to inject or absorb reactive power. This is to ensure that the Utilities can control system voltage and that the customers do not regulate voltage at the interconnection points. However, when considering system performance, this legislation is not ideal. The mission of this paper is to provide convincing data that will demonstrate the benefits of controlling reactive power for better system performance. Furthermore, it will provide a heuristic method that calculates near-optimum dispatch of DG in the distribution system in a fast approach which could potentially be implemented in practical, real-time applications.