Reliability evaluation of distribution networks under grid-tied and islanded μ grid modes is presented. The Monte Carlo simulation (MCS) algorithm is applied to a modified RBTS Bus 2 distribution network. The network includes three types of distributed energy resources, namely, solar photovoltaic (PV), wind turbine (WT), and diesel turbine generator (DTG). These distributed generators contribute to supply part of the load during grid-connected mode, but supply 100% of the load in the islanded μ grid mode. A storage system is included to decrease the peak load since the peak of the output power of the PV’s and the peak load do not match time wise in most load profiles. The impact of implementing renewable distributed generation, storage systems, and conventional generation on the reliability of distribution network is studied. This study shows that the penetration of distributed generations can improve the reliability indices of the distribution network.