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This study aims to present an optimal sensor deployment procedure that ensures robust and unique localization of line faults appearing in smart grids. In analogy to synchronized sensor networks in wireless communications, we initially model the grid as a wired mesh network, in which nodes are connected through power lines. Based on the topology of the network and distance measurements among electrical nodes, a fault-localization technique is then established. The method relies on recorded time-of-arrival (ToA) measurements at nodes which are equipped with synchronized sensors. Identification of the location for any fault is achieved via sensors which are deployed in a minimal fashion. Measurement errors on synchronized sensors are also handled with the successful application of a bad data processing technique. The performance of the overall algorithm is realized through an implementation on a 57-node power grid.