A high quality, efficient and secure electricity supply represents one of the most crucial elements for Europe's competitiveness in the future. It is widely accepted in Europe that the design, operation and trading of our electricity infrastructure will undergo fundamental changes during next two decades. The driving forces of such changes are the completion of the internal market, security of supply and environmental concerns. This change will lead to the creation of new markets for electricity and power quality.On the other hand, socio-economic transition towards sustainable energy systems has taken a 'no-return' path. It is based on a durable integration of renewable energy sources and other new and innovative efficient technologies -such as fuels cells, micro turbines, combined heat and power (CHP), etc- aiming to reduce the emission of greenhouse gases and contributing to security of supply, which is in line with the European targets of doubling the contribution of renewables and cogeneration by 2010 - further improving the use of energy and energy efficiency. The objective of this thesis is to describe the vision and investigate the trends, benefits and research needs for a new electricity network model -the Smart Electricity Networks- which will allow a durable integration of renewable energies and Distributed Generation by 2020, while contributing to the efficiency, stability, safety and reliability of the European electricity transmission and distribution supply system.