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Industrial wireless sensor networks (IWSNs) have the potential to offer several competitive advantages over traditional wired industrial monitoring and control systems, such as self organization, rapid deployment, maintenance, troubleshooting, flexibility and aggregated intelligence via parallel processing. Cable and connector failures, one of the most common reliability risks in harsh environments where chemicals, vibration, or moving parts can damage cables and connectors, are significantly reduced. There is a growing demand to improve process efficiencies, comply with environmental regulations and meet corporate financial objectives. IWSNs could impact significantly on achieving these goals by creating a highly reliable and self healing system that rapidly responds to real-time events with appropriate actions through utilizing intelligent and low cost devices. The implementation of IWSNs and challenges involved are very application specific. This paper will only consider the smart grid and underground application domains. Challenges, outstanding research issues and potential solutions within these domains will be discussed.