Abstract:Transformer is one of the sensitive components of the smart grid. The transformers already installed, will be in service for next 25 years .Very few transformers have ability to sense the parameters like voltage, current, and temperature. The next generation of transformers will require implementation of remote monitoring of a system parameters and wide range of transformers. Online transformer monitoring using advanced metering infrastructure (AMI), Advance Sensor infrastructure (ASI) is necessary for efficient operation of the smart grid. An AMI system can be effectively used as a low-cost distribution transformer monitor. The safety of the transformer plays a vital role in smooth operation of a smart grid. Dissolved gas analysis, use of vegetable oil-based dielectric coolants, ensures reliability and safety respectively of the transformer operation. Now a days many transformer manufacturers are incorporating the real time monitoring of the temperature, pressure, vacuum especially for step up transformers. Real time monitoring system consists of embedded system, GSM modem, mobile-users and GSM networks and sensors installed at transformer site. Features of Solid State Transformer (SST), Bidirectional Intelligent Semiconductor Transformer (BIST) for smart grid applications are discussed in this paper. Also, the different ways for improving efficiency of the smart grid by ensuring the safety of the transformer are focused.