An islanded microgrid is apt to have stability problems because of its low power capacity and weak network configuration. This paper mainly focuses on the droop control microgrid system consisting of an inverter interfaced distributed generator(IIDG). Using the participation factor and sensitivity analysis

simplified small signal models of the IIDG are derived. By referring to the diesel engine equivalent model

the small signal model of microgrid is created. Then by adopting the eigenvalue analysis to analyse the time-delay effect of IIDG

the small signal stability of microgrid during the variation of IIDG's power output

the droop coefficient and the time constant are studied. The results can be used to guide the IIDG operation strategy of different combinations and orders in the microgrid

and time-domain simulation is used to prove the validity of the results. This work is supported by National Natural Science Foundation of China(No. 51577018).