The periodic structures are widely studied in numerous optical applications and there is a number of good tools for numerical modeling of such a structures (for example rigorous coupled-wave analysis, finite-difference time-domain, finite element method etc.). However, when it comes to the modeling of incoherent effects in many cases of practical interest, the current methods are not rigorous enough or depend on computationally demanding averaging of coherent response. In this paper, we present a novel approach to modeling of incoherent effects in structures with lateral periodicity based on scattering matrix formalism, as a way to describe optical response of a structure, and on application of incoherent wave summation in the form of infinite geometric series and generalized Mueller matrix calculus. This method can be combined with any of the existing coherent methods of modeling periodic structures and it offers significantly faster computational performance than partially coherent/incoherent methods based on averaging. It is compared with other methods for modeling of incoherent effects and also with experimental spectroscopic data. This method is then used to explain phenomena emerging from the complex interaction between diffraction grating and thick substrate.