Driven by the existing energy policies, the use of renewable energy has increased considerably all over the world in order to respond to the increasing energy consumption and to reduce the environmental impact of the electricity generation. Although most policy makers and companies are focusing on large applications, the use of cheap small generation units, based on local renewable resources, has become increasingly attractive for the general public, small farms and remote communities. The paper presents several results of a research project aiming to identify the power quality issues and the impact of RES based distributed generation (DG) or other non-linear loads on low voltage (LV) distribution networks in Romania; the final goal is to develop a Universal Power Quality Conditioner (UPQC) able to diminish the existing disturbances. Basically, the work analyses the existing DG technologies and identifies possible solutions for their integration in Romania; taking into account the existent state of the art, the attention was paid on small systems, using wind and solar energy, and on possibility to integrate them into suburban and rural LV distribution networks. The presence of DG units at distribution voltage level means the transition from traditional passive to active distribution networks. In general, the relatively low penetration levels of DG does not produce problems; however, the nowadays massive increase of local power generation have led to new integration challenges in order to ensure the reliability and quality of the power supply. Power quality issues are identified and their assessment is the key element in the design of measures aiming to diminish all existing disturbances.