With the increased focus on renewable energy, efficiency and the need to make the business case for the smart grid, a growing number of stakeholders are focusing on smart microgrids as a viable approach to grid modernization at the local level. Developed for a community, office park, university, military base or other entity, smart microgrids incorporate local distributed energy supplies that meet the exact needs of the constituents being served while networking with the larger grid. They feature the range of smart technology in a single location, which maximizes service quality, savings and entrepreneurial job creation potential and thus helps produce a viable business case. Through smart microgrids, the economic benefits to consumers of the smart grid transformation are maximized and are a significant multiple of the cost. They also provide local choice regarding the electricity generation source and supply, such as locally distributed renewable energy sources. More commonplace in Europe and Japan, smart microgrids face some policy and regulatory barriers here that are being challenged as the reliability, quality and environmental benefits they offer become clearer.