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Power quality problems are now receiving much interest from the distribution system operators (DSO). This can be attributed to rising competition in today's electricity markets, new regulations and standards regarding the power quality, and also because newer types of load equipment require certain levels of power quality. Furthermore, the current trend towards increased penetration of distributed generation (DG) in the distribution network (in particular electronics interfaced and intermittent DG) has its impact on the power quality performance of the distribution networks, which also draw more attention of the DSOs to the power quality issues. The research presented in the thesis is divided into two main parts; the first part is to estimate and evaluate power quality indices in distribution networks with DG. By comparing the estimated PQ performance with the customers' PQ requirements the weak areas of the network are identified, i.e., the areas requiring power quality improvements. Most of the PQ phenomena are well defined in international standards and appropriate thresholds for individual phenomena are set in these standards. The thesis presents simulation and evaluation methodologies for some of the main PQ phenomena. Particular attention is given to the longer terms study of harmonics in distribution network with limited monitoring. The second part deals with the optimum provision of differentiated power quality based on the temporal and spatial variations of the network state and the customers' power quality requirements. Two new global PQ indices are developed to evaluate the overall PQ of a bus in compressed format. The proposed global indices are the Compound Bus PQ Index (CBPQI) which is based on Analytic Hierarchy Process (AHP) methodology and the PQ Reserve index (PQR) which is based on weighted average of performance of different phenomena. The CBPQI is then used as an objective function to optimize the selection of the PQ mitigation solutions. This involves utilising the available power quality mitigation solutions and considering the new smart technologies for network operation in order to provide the optimum level of power quality to different areas of the network at different times. The research outcomes contribute to the benchmarking of power quality performance, quantifying the impact of DG on the power quality in the networks, and to identifying the areas of distribution networks where the investments in power quality monitors and solutions should be made. The studies presented in the thesis are based on both simulations and real PQ measurements. All the simulations are performed in DigSilent PowerFactory and OpenDSS simulation software packages. The studies are performed on a generic distribution network and a real distribution feeder.