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Various distributed generation units (DGs) are connected to utility power grid. With the advances in power electronics technology, many electronics converter interfaces have been utilized in DGs. The power balance control strategies can be achieved by the flexible control modes of the power electronics converter. However, because of the dynamic response and adjustment ability of the electronics converter interface, the disturbance phenomena caused by the faults are not so distinct that the sensitivity and reliability of the relay may be decreased. This paper presents transient polarity comparison based protection for system with power electronics interfaced DGs. The relays are connected to the current transducers (CTs) at both ends of the protected line to extract the fault transient signals. The polarities of the fault transient signals at both ends of the protected line are compared to determine whether a fault is inside or outside the protected line. A typical distribution power system with power electronics interfaced DGs is simulated. Various tests with respect to various fault conditions are conducted. Results show that the presented technique can correctly distinguish between internal and external faults. The technique is simple in application and fast in operation.