Bulk connection of renewable energy sources to the existing distribution networks in the recent years has resulted in high increase of the power systems complexity. This also has changed (and will be changing) dynamic properties of the power systems. Both of these factors lead to the increasing size of the power system models, which are essential to analysis of the power system operation and stability problems. Due to the difficulties related to obtaining data for these models, dynamic equivalencing becomes an interesting solution to the future power systems modelling. Proper equivalencing method is supposed to maintain the main dynamic characteristics of a power system whilst optimally (reasonably) reducing its size. This paper focuses on deriving dynamic equivalents of distribution network taking distributed generators into consideration. The dynamic equivalents are established by system identification method.