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The environments in which current electric grids operate as well as the requirements for the emerging smart grid differ substantially from those of today's Internet and telecommunication networks. For example, typical electric or gas meters in the advanced metering infrastructure (AMI) are low-power, low-capability wireless devices utilizing personal area wireless network technology (e.g., IEEE 802.15.4). These devices are low-cost, typically with 4-12 kbytes of RAM and 64-256 kbytes of flash memory, and are often connected to the backhaul via low-bandwidth links. Comparing this to the high-powered, high-capability devices of the Internet with gigabytes of RAM and storage, the differences are striking. Security solutions designed for capability-rich Internet devices will not be suitable for the capability-poor devices of the smart grid; thus, new requirements are needed that can efficiently operate in resource constrained devices. With this operating environment in mind, we present a smart grid key management framework with application to AMI networks. Specifically, we describe how this key management model can be realized in such a resource-constrained environment using existing standard protocols and provide preliminary performance results.