Distrib ution Network Operato rs (DNOs) are being s ubstituted by distribution system operator (DSO). Determining the value of electricity in distributi on level is crucial, where decentr alized pricing of energy dema nds careful consi deration. Distributio n ne tworks with passive players are being altered to distribution systems with proactiv e marke t players. The competition among energy suppliers and consumers needs to be assessed by a ne w entity, executing market procedu res and determini ng the market settlement and clearing price. This paper addresses the optimal distributed generation (DG) placement and sizing problem with the applicat ion of Distrib ution Locational Mar ginal Price (DLMP) using genetic algorithm (GA). The standa rd IEEE 33‐ bus has been employed as an app ropriate case study. This novel method aims to reduce the uncertai nty, which is inherent ly imposed by the Renewabl e Energy Sourc es (RES) and optimiz es network in a cost‐ effective and reliable manner. The simulation results clarify that the proposed method applied through marke t operation is more compatible with ongoing distributi on systems in comp arison with conventional approaches, which are being used by network operators to minimize power loss or maximize voltage stability . Additional ly, superiority of the proposed DLMP method over Locationa l Marginal Price (LMP)‐ based ranking method and an analyti cal approac h has been proved. Employ ed approach results in 5% improv ement in s ocial welfar e of competitive marke t. K E Y W O R D S

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