The application of renewable energy in electric power system is growing rapidly due to enhanced public concerns for adverse environmental impacts and escalation in energy costs associated with the use of conventional energy sources, distributed generation (DG) such as wind is being recognized as an encouraging and cost effective generation source both in large grid connected systems and small isolated applications. Power output from DG is not readily controllable. High distributed generation penetration can lead to high-risk levels in power system reliability and stability. In order to maintain the system stability, considerable effort has been devoted to the economic evaluation of power systems utilizing renewable energy, comparatively less emphasis has been given to the related reliability analyses of such systems particularly considering the appreciate volume and location of possible distributed generation. This paper presents a probabilistic evaluation approach that can incorporate the impacts on reliability of new energy utilization in electric power systems, the basic concepts, indices, and special issues in the probabilistic system reliability assessment are discussed, several steps designated as equivalent simplification and the islanded reliability calculating method are proposed and discussed. Firstly the equivalent failure rate and failure duration time for a given system is determined using system equivalent simplification, then, the islanded probability at a load point for a given system containing distributed generation is calculated using probabilistic approach, at last, different operating strategies were compared and the resulting benefits were evaluated. The analysis results of example show that the system reliability has been improved significantly when DG is connected to the power system, furthermore, the system reliability can be enhanced more if the DG with more capability is located at the feeder line which bears more loads. Therefore, the probabilistic evaluation approach is feasible for the operator to decide the appreciate capability and detailed location of possible DG in electric power systems so that a desired reliability level is obtained. Copyright (C) 2012 Praise Worthy Prize S.r.l. - All rights reserved.