This chapter gives a brief explanation of the transition from the traditional power grid to the Smart Grid. Section 2.1 provides an overview of the electricity chain, covering the process from power generation to end consumers, and describes the so-called “supply follows demand” paradigm. Additionally, it highlights the characteristics of three different types of power plants, including their reaction time and costs. Section 2.2 discusses the SET Plan and reasons behind the transition from the legacy grid to the Smart Grid. It also emphasizes the need for interoperability in the context of Smart Grid and introduces the five interoperability layers of the Smart Grid architecture model (SGAM), along with their respective zones and domains. The importance of information and communication technologies (ICT) in realizing the concept of the Smart Grid is explored in Sect. 2.3. Furthermore, Sect. 2.4 explains the shift in paradigms from the traditional “supply follows demand” approach of the legacy grid to the concept of “demand-side management” of Smart Grid. The chapter concludes in Sect. 2.5 by emphasizing the future necessity of a global and intelligent management system. This system would effectively coordinate and control the various underlying networks to ensure a match between supply and demand.