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Concerns with global warming prompted many governments to mandate increased proportion of electricity generation from renewable sources. This, together with the desire to have more efficient and secure power generation and distribution, has driven research in the next-generation power grid, namely, the smart grid. Through integrating advanced information and communication technologies with power electronic and electric power technologies, smart grid will be highly reliable, efficient, and environmental-friendly. A key component of smart grid is the communication system. This paper explores the design goals and functions of the smart grid communication system, followed by an in-depth investigation on the communication requirements. Discussions on some of the recent developments related to smart grid communication systems are also introduced.