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Recently, wireless sensor networks have been considered as an opportunity to realize reliable and low-cost remote monitoring systems for smart grid. However, interference due to nonlinear electric power equipment and fading as a result of obstacles in various smart grid environments from generation to end-user sides make realization of reliable and energy-efficient communication a challenging task for WSNs in smart grid. In this article, spectrum-aware and cognitive sensor networks (SCSNs) are proposed to overcome spatio-temporally varying spectrum characteristics and harsh environmental conditions for WSN-based smart grid applications. Specifically, potential advantages, application areas, and protocol design principles of SCSN are introduced. The existing communication protocols and algorithms devised for dynamic spectrum management networks and WSNs are discussed along with the open research issues for the fulfillment of SCSNs. A case study is also presented to reveal the reliable transport performance in SCSNs for different smart grid environments. Lastly, different energy harvesting techniques for SCSN-based smart grid applications are reviewed. Here, our goal is to envision potentials of SCSNs for reliable and low-cost remote monitoring solutions for smart grid.