A type of electrical grid that is having various features such as smart meters, smart appliances, renewable energy resources and energy efficient resources is termed as smart grids. Smart grids have smart meters, smart appliances, renewable energy resources and energy efficient resources. The main motive of smart grid is to manage the demand of electricity in a sustainable and economic way. To satisfy both the increasing demand for power and the need to reduce carbon dioxide emissions, we need smart grid that can handle these challenges in a sustainable, reliable and economic way. Important aspects of the grids are electronic power conditioning and the production control. An ideal smart grid should be reliable, flexible in network topology, efficient, load adjustment, load balancing, peak curtailment and sustainable.