Power quality is influenced by neutral grounding methods in distribution systems. Optimization for neutral grounding methods is discussed in the paper. Petersen-coil in parallel with high resistance earthed technique has a better performance in safety and power quality than other neutral point grounding techniques. To improve power quality, a novel method for measurement of zero sequence impedance in distribution systems is presented, Petersen-coil inductance is adjusted to compensate the total capacitance, and the resistor which is in parallel with the Petersen-coil is adjusted to control the over-voltage; some other novel techniques for grounding fault feeder protection based on testing the fault resistance or the energy dissipated in the fault point are also presented. The method of Petersen-coil tuning has been developed. Experimental results show that the optimization for neutral grounding methods and the protections proposed can improve the power quality by reducing the over-voltage, the residual current and the grounding fault duration