This research introduces a novel damped alternating current (DAC) testing methodology, which integrates an enhanced DAC generator with a pulse‐based distributed partial discharge (PD) detection technique. The advanced DAC generator is designed without the need for high voltage (HV) solid‐state switches, thereby offering a cost‐effective solution for field‐testing voltage generation through a direct current–alternating current conversion approach. To meet the demand for high instantaneous power, a capacitor bank is employed as the power supply. Furthermore, the implementation of a distributed PD detection technique enhances sensitivity and eliminates limitations associated with cable length. To minimize the construction costs of the distributed PD‐detection system, a pulse synchronization technique has been employed. Efforts to reduce the system's weight were informed by simulations, resulting in the design and development of a prototype weighing 850 kg for a 64/110 kV power cable. The reduction in the number of HV solid‐state switches contributes to significant cost savings, amounting to tens of thousands of dollars, when compared to conventional DAC generators. Laboratory and field tests validated the effectiveness of the cost‐efficient DAC testing methodology.