Abstract
This paper discusses the necessity and significance of smart and sustainable energy system in the state of Azad Jammu and Kashmir (AJK). A smart grid (SG) enhances the reliability and efficiency of power grid by responding to number of faults and disturbances occurring in a power system (PS) automatically. If not addressed appropriately, the power crisis will negatively impact the state. The AJK state has abundant hydel, wind and solar potentials that are not ever utilized effectively. The paper highlights the challenges of traditional grid and the potential of adoption of smart grid in AJK state to overcome energy crisis using distributed generation (DG).