1. Introduction and Literature Review

Nowadays, increasing energy demand and dependence on fossil fuel become important issues facing the whole world. Therefore, there is a big trend to use renewable energy sources (RES) to address the electricity generation. High penetration of RES and energy management impose immense challenges to the power system. With these challenges, the overall system operation requires advanced technologies in order to enhance the power system performance [1]. Smart grid is a system by which the existing power system infrastructure is being upgraded with the integration of multiple technologies such as, two-way power flow, two-way communication, distributed generation, advanced automated controls, and forecasting system [2]. Smart grid system enables interaction between the generation and the consumer which allow the optimal usage of energy based on environmental, price preferences and system technical issues. This, in turn, enables the power system to be more reliable, efficient and secure [3]. Table 1.1 shows the difference between the traditional grid and the smart grid system.