Distributed systems that have high penetration of inverter-based distributed generation (IDG) will have changes in fault current levels causing traditional overcurrent protective devices to not operate as intended. As a result, distributed systems require new protection schemes to deal with the wide varieties of IDG. This paper discusses the impact of IDGs on the protection of the distributed system. To solve the issues faced in grids with IDG, a fault detection method that utilizes instantaneous power theory is proposed. Simulation and experimental results illustrate how this theory can be used to detect faults even with low fault current levels.