The effect on distribution network with penetration of photovoltaic system is studied. Firstly, the effect to distribution network's power flow is studied when photovoltaic power is connected to distribution network. The bus voltages are calculated when the power factor cosφ of the photovoltaic power varies from -0.95 (absorbing reactive power) to +0.95 (developing reactive power) and photovoltaic power varies from 0 MW to 1.5 MW. Then the effect to distribution network's voltage is studied when photovoltaic power is connected to distribution network. The voltage of the node connecting PV power with grid is adjusted by adjusting photovoltaic power factor, regulating step-up transformer ratio and switching reactive power compensation device of step-up substation. Finally, the effect of photovoltaic power on relay protection in distribution network is studied. The effects of photovoltaic power on short-circuit current and relay protection are different when the location and the capacity of photovoltaic power are different. The photovoltaic power is in the upstream, the downstream and the interior of relay protection according to the relative position of photovoltaic power and relay protection. The simulation has carried out respectively according to different locations.