The optimal sizing and placement of Distributed Generation units (DG) are becoming very attractive to researchers these days. In this paper a two stage approach has been used for allocation and sizing of DGs in distribution system with time varying load model. The strategic placement of DGs can help in reducing energy losses and improving voltage profile. The proposed work discusses time varying loads that can be useful for selecting the location and optimizing DG operation. The method has the potential to be used for integrating the available DGs by identifying the best locations in a power system. The proposed method has been demonstrated on 9-bus test system.