The smart transformer (ST) has been studied extensively in recent years exploring its capabilities in the modern electric grid. Concentrating on the low voltage (LV) side of an ST, this paper proposes a grid structure where a photovoltaic (PV) system and battery energy storage system (BESS) are interfaced to the ST LV DC link. The LV AC grid consists of AC loads and a microgrid with a PV unit and DC loads. Investigation is done on how an ST can achieve proper power management, in addition to carrying out the functions of a conventional transformer on the LV side. A PSCAD simulation of the proposed grid structure is carried out and the operation of the system in the various power flow scenarios is verified. The paper also emphasizes the capability of ST to eliminate the need of other power quality improvement devices in the distribution grid by maintaining the appropriate voltages in the LV grid.