Low-inertia power generation units make nanogrids vulnerable to the voltage and power fluctuations caused by pulse loads and abnormal grid conditions. The conversion of critical loads to smart loads is a potential solution for improving the stability and power quality in nanogrids. This paper investigates the effects of utilizing smart loads on the performance of nanogrids. A smart load can compensate for sudden deviations between supply and demand and therefore can mitigate voltage and power oscillations in lowinertia nanogrids. The conversion of critical loads to smart loads can reduce the stress on the energy storage units and minimize the required battery banks in nanogrids. In this paper, several case studies are considered to verify the stability and power quality improvement of nanogrids when some loads are converted to smart loads. INDEX TERMS Central battery bank, critical loads, grid of nanogrids (GNG), small-signal stability, smart city, smart loads.