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Successful operation of a smart grid demands on close cooperation among the generation, transmission and distribution systems. A smart grid offers a two-way communication between the source and the load; integrates renewable sources into the generation system; and provides reliability and sustainability in the entire power system from generation through to ultimate power consumption. The lack of reliability in continuous production from renewable sources offers a challenging scenario in the real-time power delivery. Different storage options have been considered to account for this unreliability. Popular energy storage devices include electric vehicles and plug-in electric vehicles with two-way power transfer capability (Grid-to-Vehicle and Vehicle-to-Grid). This project aims to address challenges on how to increase the average lifetime of vehicles while discharging to the grid, how to make this two-way power transfer economically viable; and how to make the whole system more reliable and sustainable in the presence of these vehicles.