Renewable energy sources are one key enabler to decrease greenhouse gas emissions and to cope with the anthropogenic climate change. Their intermittent behavior and limited storage capabilities present a new challenge to power system operators to maintain power quality and reliability. Additional technical complexity arises from the large number of small distributed generation units and their allocation within the power system. Market liberalization and changing regulatory framework lead to additional organizational complexity. As a result, the design and operation of the future electric energy system have to be redefined. Sophisticated information and communication architectures, automation concepts, and control approaches are necessary in order to manage the higher complexity of so-called smart grids. This paper provides an overview of the state of the art and recent developments enabling higher intelligence in future smart grids. The integration of renewable sources and storage systems into the power grids is analyzed. Energy management and demand response methods and important automation paradigms and domain standards are also reviewed.