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Smart grid is understood to be the key enabling technology for renewable energy development. This concept can be extended to the energy supply challenge in rural areas in Latin America. Abundant distributed renewable energy resources surrounding isolated towns offer an unique opportunity for the development of smart and cost-effective isolated microgrids allowing: efficient use of local resources, reduction in the operational costs and fossil fuels dependency, extension of the system components lifetime, commitment of the local community. This paper presents a smart microgrid design solution covering both the technical and the community integration aspects. The approach is applied in the framework of an R&D project to a real isolated town located in the Chilean northern region. Finally, the extension of the proposal for other Latin American regions is discussed.