AbstractElectricity power systems worldwide have traditionally been designed to a vertically connected scheme characterised by centralised generation. Over the last few decades, several factors have dictated a gradual shift from the central‐control approach to a more distributed layout where distributed generation (DG) technologies are effectively integrated and not just connected (appended) to the networks; amongst others liberalisation of electricity markets, security and quality of supply and environmental issues. Photovoltaic powered distributed generation (PV‐DG), although still having a much lesser impact than other DG technologies, is increasingly being embedded into electricity distribution networks worldwide within the framework of successful regulatory state and marketing programmes. PV‐DG has added values (benefits) for the electricity systems that extend from peak power and load reduction (when deployed close to electricity consumption points) to participation in grid‐supporting or grid‐forming modes of operation. The question arises as to what the present situation of PV technology is for its optimal integration in distribution networks, whether there are still technical barriers to overcome as well as new opportunities for PV in future renewably supplied electricity systems. This paper presents the current state of knowledge concerning these topics from a European perspective with regard to different grid structures. It also discusses existing standards, new opportunities to provide grid services and research and development needs identified to fully exploit the added‐value—and still developing—benefits of PV‐DG. Copyright © 2008 John Wiley & Sons, Ltd.