Reactive power planning (RPP) is one of the most important task in operation and control of power systems. This paper presents a methodology, based on genetic algorithms (GA), for optimal placement of DG units in power networks to achieve both effects: to guarantee the voltage profile and to maximize the voltage loadability under normal and/or contingency conditions. The methodology aims in finding the configuration, among a set of system components, which meets the desired system reliability requirements taking into account stability limits. Results shown in the paper indicate that the proposed formulations can be used to determine which the best buses are where the addition of small distributed generator units can greatly enhance the voltage stability of the whole network and power transfer capability under contingencies. (7 pages)