Smart grid is expected to improve the efficiency, reliability and economics of current energy systems. Using two-way flow of energy and information, smart grid builds an automated, highly distributed energy delivery network. In this book, the requirements for intrusion detection systems in smart grid, neighborhood area network (NAN) in particular, are presented. An intrusion detection system (IDS) that considers the needs and requirements of the NAN is designed and evaluated using OPNET Modeler. The IDS tackles the communication and computation overhead constraints as well as the single point of failure problem which exists in central approaches.