A smart grid is an electrical network based on digital technology that is used to deliver electricity to consumers using two-way digital communication. This system enables observation, analysis, control and communication within the supply chain to help develop efficiency, reduce energy consumption and cost and maximize the translucency and reliability of the energy supply chain. The purpose of the smart grid is to motivate consumer contribution in the operation of the grid also allows electricity markets to arise and create business and can also heal itself and operate more efficiently. The brief benefits and applications include saving energy, reducing prices, and increasing reliability. And the Smart Grid will provide consumers with information, control and choices that will enable them to engage in new electricity markets. The aim of the report is to understand the concept of smart grids and identify the applications, benefits and problems of smart grid. This diagram shows that with renewable energy, consumers can create their own energy and have the right to use a “greener” energy mix. Flexible distribution enables a more responsive and stable power grid. Active energy efficiency and energy management create visible energy and enable people to meet their consumption. .Electric vehicles are revolutionizing the observation of mobility and, at the same time, access to energy, its use and storage. Real-time network management makes it possible to anticipate consumption and acclimatize the supply.The challenges of the existing networkThe issues of efficiencyIn managing peak loads and energy savings, the new intelligent network could have wonderful results on the global economy. If the grid were just 5% more efficient... middle of paper ...... it must be supported by a smart and secure communications network, electric utilities will have the infrastructure, applications and services necessary to provide non-polluting services. -Stop high quality power safely and effectively. The smart system consists of a smart grid and a smart meter working together. This system is efficient because it responds to demand, automatically generates and delivers an appropriate amount of electricity to consumers. Consumers can monitor their own electricity bills at the end of each month using real-time access which allows users to determine the time and duration of appliance operation. And through it all, the smart grid is absolutely and definitely more useful for our lives and our future. /chapter/10.1007/978-3-642-38030-3_4