Penetration level of renewable energy such as solar and wind power into the grid is sharply increasing worldwide. This paper investigates the impact of the increasing level of distributed generation (DG) on the distribution network protection. Studies were commenced to mitigate the effect of small scale embedded generation (SSEG) on the system fault levels. Residential DG penetration level is modelled on the UK typical low voltage (LV) network considering the fault level stability limits. Based on penetration level of DG energy storages in the form of battery bank are determined to charge and discharge according to daily load cycle. Short circuit analysis results are compared with the UK passive network to investigate the impact of the DG on the short circuit currents at the distribution transformer. In this study, power flow from the transformer secondary is kept within limits to avoid malfunctioning of relays. The flow of reverse power in the presence of DG is confined by energy storage elements.