Abstract: Artificial Intelligence (AI) is transforming modern power systems by enabling real-time monitoring, predictive maintenance, and optimized energy management. This paper presents a thematic narrative review of AI applications in smart grids, emphasizing their role in enhancing energy efficiency, grid stability, and renewable energy integration. The analysis synthesizes evidence from developing economies where AI adoption is constrained by governance, institutional, and infrastructural barriers. Key challenges include fragmented regulatory frameworks, cybersecurity vulnerabilities, data-quality issues, and skill shortages that hinder effective digitalization. The study highlights policy and technological synergies required to advance AI-driven smart grids, focusing on harmonized data standards, capacitybuilding programs, and public-private partnerships. Strategic enablers such as interoperability frameworks, digital infrastructure investments, and regional cooperation are identified as essential to fostering inclusive and resilient energy transitions. The findings underscore that bridging the policytechnology gap through transparent, adaptive, and ethical AI governance is vital for achieving sustainable and equitable energy futures in developing regions.