Starting from the review of past development of distributed energy resources (DER), this paper investigates the current situation and also future trend of DER development. The primary focuses of this paper include: 1) the potential and typical applications of DER in China; 2) the grid's hosting capacity for DER; 3) the methods for distributed generation (DG) to participate in electric power market. In this paper, we conclude that the DER is an essential and critical part of modern energy system. With our estimation, China has a potential capacity of 5 400 GW renewable DER for future development. By 2030, 2 000 GW of the DER capacity will be technically available and 500~800 GW of the DER capacity will be economically available, respectively for development. However, for the DER, which are usually non-utility-owned energy resources, their chronological deployment requires corresponding sufficient hosting capacity from grid. Therefore, we have to optimize the scale and deployment of the DER's development by considering the hosting capacity. In addition, we propose two methods for DG to participate in the electric power market.