Smart grids have become a focal point in renewable energy source researches. Sustainability and viability of distributed grids are highly dependent on the reduction of the operational and maintenance costs. The most efficient way of reducing these costs would be to continuously monitor the condition of these systems. This allows for early detection of the power quality degeneration, and facilitating a proactive response, prevent a fault ride-through the renewable energy conversion system, minimizing downtime, and maximizing productivity. This paper provides then the assessment of an advanced signal processing technique (demodulation tool) using the instantaneous power for voltage sags detection in smart grids.