Smart Grids are able to rigorously change the current electricity system. Currently pilot project are implemented and the next step is to embed Smart Grids into the electricity system. This requires new institutions, because of the new possibilities of a Smart Grid. There are two challenges to embed the Smart Grid into a town in Shenzhen where this study was based. (1) Unequal distribution of benefits, the distribution system operator has to implement a more expensive grid which lowers sales. (2) Large electricity users which cover 70% of the total consumption do not benefit from the Smart Grid like residential and small commercial usage. To counter the first challenge trade-offs need to be made between economic viability and sustainable performance. Large electricity users could be incentive to install renewable energy sources but still remain an issue for the Smart Grid. One way or the other, strong governmental regulation is necessary since the market does not converge towards a Smart Grid.