Smart grid technology has undeniably reshaped the energy sector, driving efficiency and reliability in power generation and distribution. Government policies have a crucial role in this transformation. Regulations such as the Energy Independence and Security Act of 2007 in the U.S. have been instrumental in promoting the development and use of smart grid technology. This act specifically aimed to modernize the country’s electricity grid, improve its security, and increase efficiency through peak demand reduction and real-time system monitoring. Elsewhere, the European Union’s guidelines for smart grid systems under its ‘Third Energy Package’ have driven the integration of renewable energies. Regulating bodies worldwide provide financial incentives, direct funding and outline mandatory standards, thus playing an integral role in the evolution of smart grid technology. Continued patterns of policy-making signify the sustained growth and the future potential of smart grid technology.