Distributed state estimation (DSE) is considered as a more robust and reliable alternative for centralized state estimation (CSE) in power system. Especially, taking into account the future power grid, so called smart grid in which bi-directional transfer of energy and information happens, and renewable energy sources with huge indeterminacy are applied more than before. Combining the mentioned features and complexity of the power network, there is a high probability that CSE face problems such as communication bottleneck or security/reliability issues. So, DSE has the potential to be considered as a solution to solve the mentioned issues. In this paper, first, a modified convergence criterion is proposed and has been tested for different approaches of DSE problem, considering the most important factors such as iteration number, convergence rate, and data needed to be transferred to/from each area. Then, an optimal partitioning technique has been implemented for clustering the system into different areas. Besides the detailed analysis and comparison of recent DSE methods, the proposed partitioning method's effectiveness and scalability has been shown in this paper.