This paper describes the reasons behind the crisis in energy sector and the actual status of the energy supply demand gap. With old infrastructure and increasing demand for electricity, Pakistan critically needs the addition in the current energy production and also efficient utilization. Pakistan is incapable to fulfil its energy demands, and the energy crisis is damaging the economy growth and we want to efficiently manage the power system in the current crisis scenario. There are challenges to smartly manage the power system and opportunities for new technologies to be implemented. Smart grid technology is the state of the art technology to manage the power system. The main objective of this study is to discuss the role of smart grid to the integration of renewable energies and cut down the energy produced from oil and gas. We discuss the potential of renewable energies and available wireless technologies in Pakistan that can be applied in smart grids along with the proposed techniques to interconnect the national power system and organizations. In this study, we also find the smart grid as the best option and show that how a smart grid can manage the energy system and how this technology can be implemented in this country. We describe the basic building blocks for smart grid technology and offered an approach for applying suitable applications of the smart grid in Pakistan.