The presence of distributed generation in modern power system renders the traditional automatic generation control (AGC) strategies more challenging. The penetration of renewable energy causes the power output to be affected by environment greatly. For example, when PV system is included in a power grid, the power output variation of the PV system will affect the balance between load and resource of the power system. However, the power output variation of the PV system is unavoidable for the environmental uncertainty. An improved AGC method is proposed in this paper to reduce the negative impacts of the photovoltaic power uncertainty and high fluctuation. Firstly, the power output characteristic of PV array is discussed, and multi-area power system model is built with high penetration of photovoltaic (PV) system. Then, in order to analyse the influence of PV power output uncertainty and fluctuation on AGC, the AGC performance with different power fluctuation caused by different maximum power point tracking (MPPT) method is indicated. Furthermore, a compensation unit is designed and introduced to eliminate the adverse effect of PV power output on AGC. Finally, based on the distributed model predictive control (DMPC) theory, taking the step load as perturbation variables, a two-area interconnected power grid AGC dynamic model with two PV systems is shown as an example to testify the proposed method. The simulation results show that the proposed method can guarantee the good dynamic response performance of AGC system under the condition of high fluctuation and uncertainty of PV system, and the feasibility and effectiveness of the proposed method is also verified.