The invention of “smart grid” promises to improve the efficiency and reliability of the power system. As smart grid is turning out to be one of the most promising technologies, its security concerns are becoming more crucial. The grid is susceptible to different types of attacks. This paper will focus on these threats and risks especially relating to cyber security. Cyber security is a vital topic, since the smart grid uses high level of computation like the IT. We will also see cryptography and key management techniques that are required to overcome these attacks. Privacy of consumers is another important security concern that this paper will deal with. 1. Introduction One of the most important, complex, and intelligent network we have is the “power system”. This system consists of circuits, wires, towers, transformers, sensors, and cables interlinked to provide us with uninterrupted power supply. This system is mainly a mechanical system and has very little electronics associated with it like sensors and communication. However, as technology has progressed rapidly and almost all the latest devices need electricity for their operation, it is necessary that we make our present power system more reliable and efficient [1]. We can say the demand for electricity is greater than its supply. The demand is not only high but also fluctuating. We could rely on renewable resources like solar energy and wind energy to meet the present need, but unfortunately, they turn out to be fluctuating too. The smart grid enhances the functionality of the power delivery system. This is possible because smart grid uses sensors, communications, computation, and control in order to make the system smart and by applying intelligence to it in the form of control through feedback or in other words by using two way communication. In order to utilize the available resources, consumers need to change, and they need to act more “smart”. They have to change from being passive consumers to being active consumers [1]. Smart grids aim to reduce the energy consumption, ensure reliability of power supply, reduce carbon foot print, and minimize the costs associated with power consumption. The smart grid system has many advantages, one of them being cost effectiveness. This is because the grid uses internet for communication purpose. However, using the internet means vulnerability to cyber attacks. As opposed to the original power system, the smart grid uses ethernet, TCP/IP and other operating systems, thus making the grid more susceptible to attacks. The smart grid should enhance the
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