Rising dependency on reliable electric power has resulted in emerging technologies in power system such as
Distributed Generation (DG). Recent developments in Information and Communication Technologies (ICTs),
Advanced Metering Infrastructures (AMIs) and Wide Area Measurement Systems (WAMS) will guarantee high
penetration of DR programs in near future. In this paper, optimal allocation of DG units in the transmission
systems with the aim of improving reliability of power system is carried out through introducing a placement
index. The placement index takes both reliability and economic issues into the account. The impacts of DR
programs on optimal allocation of DG units are also considered. Power system operation in the presence of DR
programs and DG units are implemented through a unit commitment problem and several operational parameters
are scrutinized so as to underline the efficiency of the proposed method, considering the complexity of
the problem in this paper, population based intelligent search methods have been utilized extensively. The
effectiveness of proposed allocation method is illustrated on IEEE RTS-79.