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The electric power systems of many industrialized nations are challenged by the need to accommodate distributed renewable generation, increasing demands of a digital society, growing threats to infrastructure security, and concerns over global climate disruption. The ‘smart grid’—with a two-way flow of electricity and information between utilities and consumers—can help address these challenges, but various financial, regulatory, and technical obstacles hinder its rapid deployment. An overview of experiences with smart-grid policies in pioneering countries shows that many governments have designed interventions to overcome these barriers and to facilitate grid modernization. Smart-grid policies include a new generation of regulations and finance models such as regulatory targets, requirements for data security and privacy, renewable energy credits, and various interconnection tariffs and utility subsidies.