The rapid urbanization and development of modern cities increases the demand of the city's infrastructure networks. Particularly, a continuous expansion of electric network scale is required, which results in an increase of system capacitive current. For the arc suppression coil grounding system, increasing compensation capacity of arc suppression coil is necessary, especially when the single-phase earth fault occurs. And this could be realized by updating the master arc suppression coil. In this paper, a new approach is adopted which involve installing a distributed arc suppression coil to cooperate with the mater one. The compensation effect of distributed arc suppression coil is studied through establishing models of 10kV network system and distributed arc suppression coil with the software PSCAD/EMTDC. Different installation positions and compensation capacities are investigated. The results show that the use of the distributed arc suppression coil can markedly reduce the fault residual current into a controllable and reasonable range. Among four different installation positions, line terminal installation is relatively preferable. Besides, the proportion of distributed compensation capacity in total system compensation capacity should preferably be 45%, where residual current at the point of grounding fault always remain as less than 5A.