The electrical power system provides vital support for the functioning of modern so- cieties. Driven by the growing interest in clean, reliable and affordable energy, the electrical power system is facing transitions. The share of renewable energy sources in electricity supply is growing. In addition, the end customers of electricity, such as households, are transforming into “prosumers” that can generate, store, and export elec- tricity. Moreover, the demand for active participation of the end customers in electricity market is rising. Furthermore, the increasing electrification of the transportation sector is foreseen to bring about large wave of electric vehicles into neighborhoods. The future electricity grid, referred to as the smart grid, is expected to conveniently accommodate all the transitions to deliver clean, reliable and affordable energy. Unfortunately, at the moment there is no clear recipe for constructing the smart grid. The objective of this thesis is to find solutions for some of the challenges to be addressed to construct the smart grid. As more and more end customers become prosumers, the electrical power system will shift from the old paradigm in which electricity is centrally generated at few large scale power plants and supplied to distributed consumers, to a new decentralized paradigm where different kinds of prosumers exchange power on the grid. Thus, the rather old power system that was designed for centralized power supply needs to be restructured since it is not convenient to accommodate the new paradigm. To this end, this thesis proposes a new architecture of the smart grid based on the concept of holons. In the proposed holonic architecture of the smart grid, prosumers are recursively organized as systems of systems to eventually constitute the overall smart grid holarchy. The attrac- tive attributes of the holonic architecture include its provision of sufficient autonomy to the prosumers to manage their energy resources, its recursive structure that orga- nizes prosumers as systems of systems at various aggregation layers, and the dynamic reconfiguration capability of the prosumers to adapt to the changes in the environment. The benefits of the holonic control architecture are providing convenience for active participation of prosumers in the energy market, enabling scalable distributed control of myriad of energy resources, and increasing the reliability, efficiency, self-healing, and dynamic recovery of the smart grid. In the new paradigm, managing the load profile of the prosumers becomes a major challenge due to various factors. The energy production of the renewable sources, such as solar panels, are highly intermittent depending on the weather conditions. Besides, the large amount of energy consumed in charging the electric vehicles could introduce peak loads. Moreover, the autonomous prosumers might exploit the flexibility of their energy resources to achieve load profiles that maximize their individual benefits, which could add up to volatile aggregate load profile of the energy community. The volatility may result in undesirable peak loads, hence it needs to be minimized. In this thesis, a suitable load management strategy is developed to cope with this challenge. Our load management strategy employs a pricing incentive to coordinate the prosumers in the energy community so that a desirable aggregate load shape is achieved while the autonomous prosumers selfishly strive to minimize their individual costs. The pric- ing incentive adjusts to the intermittence of the renewable energy sources and the price-responsiveness of the prosumers, thereby effectively persuading the autonomous prosumers to a desirable aggregate load shape. In the classical electrical power system, the low voltage (LV) grid delivers energy in one direction, top-down, from controlled supply side to passive end consumers with moderate loads. Thus, the voltage and current dynamics can easily be maintained within the required operational boundaries. But this is changing. As more distributed energy sources and electric vehicles become widely available at the end customers, the energy produced from the distributed energy sources and the large energy consumption of electric vehicles could lead to undesirable voltage and current dynamics that could violate the operational boundaries of the LV grid. In this thesis, we assess how the physical structure of the LV grid influences its ability to maintain safe operational condition in the new paradigm. Using this assessment, we identified the key structural features of the LV grid that influence its operational performance, based on which we propose an algorithm to design the LV grid structure that can cope with the new paradigm. Clearly, improving the structure of the LV grid is not enough by itself. It is commonly understood that intelligence of the future smart grid is provided by the support of ICT networks. Yet, the interdependence between the power grid and the ICT network might affect the reliability of the power grid. After assessing the impact of the interdependence between the LV grid and its supporting ICT network on the reliability of the LV grid, this thesis provides valuable insights for optimal design of the interdependence between the two. As prosumers increasingly dominate the power system, the performance of the sys- tem can be significantly influenced by the performance of the individual prosumers. Whereas, the performances of the individual prosumers depend on the composition of their energy resources, since different energy resources make different contributions to a prosumer. Hence, understanding the value added by an energy resource to the perfor- mance of a prosumer is crucial. In this thesis, a model that assesses the value an energy resource adds to a prosumer is presented. The developed valuation model assesses how addition of an energy resource affects a comprehensive set of performance indicators of a prosumer that incorporate economic, environmental and social dimensions. Using the valuation model, certain energy resources can be added to or removed from a prosumer to improve the desirable performance indicators of the prosumer. The solutions developed in this thesis play important roles in overcoming different challenges facing the smart grid, thereby facilitating the transition to clean, reliable and affordable energy.