One of the characteristics of smart grid is the largescale access of distributed generation to distribution network, thus encouraging distributed generation investments is of great significance to the construction of smart grid. A method of economic compensation for independent distributed generation investment in the distribution network is presented. First of all, the reliability incremental value for the customers at different load points and the saving value of distribution network expansion investment for distribution companies, after the incorporating of distributed generation, are concerned; and then, the capacity compensation charge of the customers at different load points and the distribution company is calculated respectively based on the benefit from the employment of distributed generation. This method provides a price signal for independent distributed generation investors in the distribution network and also stimulates investors for corresponding investment, and plays a guiding role in choosing the right location and capacity of distributed generation. Finally, based on a simplified distribution system, the article verifies the rationality and feasibility of the capacity compensation method studied.