Interoperability addresses the open architecture of technologies and their software systems to allow their interaction with other systems and technologies. To realize smart grid capabilities, technology deployments must connect large numbers of smart devices and systems involving hardware and software. Interoperability is defined as the capability of two or more networks, systems, devices, applications, or components to share and readily use information securely and effectively with little or no inconvenience to the user. Interoperability is an important enabling aspect of technology deployments that SGIG projects and SGDP are required to recognize and address.

In 2004, recognizing the emergence of the Smart Grid, the U.S. Department of Energy (DOE) formed the GridWise Architecture Council (GWAC) to articulate interoperability concepts and facilitate the interoperation of smart grid technologies. Three years later, the Energy Independence and Security Act of 2007 (EISA) gave the National Institute of Standards and Technology (NIST) the primary responsibility to coordinate development of a framework that includes protocols and model standards to achieve interoperability of smart grid devices and systems. The Recovery Act included $12 million for smart grid interoperability that DOE transferred to NIST to help the institute carry out its responsibilities under the EISA.

In May 2009, NIST released the initial set of 16 interoperability standards, which addressed a wide range of subjects, including smart meters, distributed generation components, and cybersecurity. This was followed in September 2009 with a report that included about 80 initial interoperability standards and 14 "priority action plans" to address gaps in the standards. "NIST Framework and Roadmap for Smart Grid Interoperability Standards" was released in January 2010.

In November 2009, NIST initiated the Smart Grid Interoperability Panel (SGIP), a new stakeholder forum to provide technical support to NIST's interoperability mission and to help address NIST's priority action plans. Comprised of more than 700 member organizations, including federal agencies as well as state and local regulators, the SGIP draws on the expertise of more than 1,800 individuals. Membership is free and open to all organizations interested in achieving the Smart Grid vision.

The SGIP develops and maintains a catalog of standards relevant to smart grid implementations and convenes members from across the spectrum of smart grid stakeholders to build consensus in the standards-making process. The SGIP coordinates closely with the GWAC and standards setting organizations internationally. Participants in SGDP and SGIG programs are well-represented within the SGIP.