Smart Grid is one of the major trends and markets which involve the whole energy conversion chain from generation to consumption. The electricity system will change from a unidirectional power flow with centralized generation to a bidirectional power flow with numerous decentralized power stations. The way a power system is operated will change from a hierarchical top-down approach to a fully automated power network with two-way electricity power flows and real-time information between generation plants, various appliances and all points in between. The three key components of Smart Grids are distributed intelligence, communication technologies, and automated control systems. The need for adapting the electricity system derives from different aspects such as environmental concerns, scarcity of non-renewable resources, new technologies, and aging infrastructure. This development goes hand in hand with a continuous reduction in non-renewable energy resource. We have to deal with an area of challenges between reliability of supply, environmental sustainability as well as economic efficiency. Thus, it has become urgent to adapt the electricity system and make it a Smart Grid.