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In order to mitigate the negative influence of geographical dispersity of modern power system and the penetration of renewable energy, a system compensation based model predictive AGC method is proposed in this paper. A compensation unit is introduced in AGC system to reduce the influence of PV power output fluctuation. Furthermore, because the distributed power system is geographically dispersed, which leads to some defects such as time delay and packet dropouts, a selection and optimization algorithm is presented to obtain the appropriate variable when delays exist. Finally, a two-area interconnected power grid with PV systems is shown as an example to testify the feasibility and effectiveness of the proposed method. The simulation results indicate that the system controlled by the proposed method has the expected dynamic performance. [ABSTRACT FROM AUTHOR]