This dissertation consists of three main parts which have the aim to achieve the universal model of distribution network which will fullfill the conditions of the advanced smart grid. In the first part of these science paper, it is done a complete energy analysis and optimization of power flow through the distribution network. The aim is to improve the present distribution network and elimination of all existing and potential difficulties which can occur in it's functioning. For observation example and as a groundwork concept this work has chosen high voltage 10(20) kV distribution network of city Osijek. It has been analyzed the operation of distribution network for the special moments of the greatest registered currents in the network and the others special situations (n-1) of high voltage power lines and special situations (n-1) of high voltage substations. As a result, following labour offers enhancement of existing distribution network and planning and developing of it's model in the future. In the second part of this dissertation, it is made theoretical model of integrated renewable energy sources from the different point of view: optimal tehnical states, optimal investment costs, optimal business costs. This theoretical model achieves the state of zero energy comsumption, and it is turn on from working in distribution mode to insular mode. For the purpose of comparison with the experience in practice of distribution company HEP d.d., it is presented the universal model of urban distribution network with integration of renewable energy sources, which is created for all different power values from integrated renewable energy sources. In the third part of this dissertation, it is done the optimalization of the universal model of distribution network with the true parameters from the present distribution network, which result with the approvement of the implementation and confirmation of universal model. After that, this work presents the analysis of working model of low voltage distribution network for the several time period which distinguish with it's share of installed renewable energy sources. On the base of this observations, and successfully reaching the state of zero energy comsumption, obtained results determine direction and course of development urban distribution network toward the future smart grid.