This paper will describe the implementation study of smart grid system in Sumba rural area, Indonesia. Sumba Smart Micro Grid System (SMGS) consist of 500kWp solar plant and 2x110kW diesel engine generator connected in 20kV system and separated by approximately 30km. When shading occur in the PV panel, there will be some changes in solar plant power generation, which may causes grid instability. To compensate the power fluctuation, an automatic diesel control was developed for the diesel engine generator, to form a Smart Diesel Generator system. By using the PLC program and governor speed droop settings, the automatic generator could control the diesel engine generator to compensate the PV power output and perform the load sharing. Several tests has been made to adjust the optimum PI control and speed droop value. The test of the smart diesel generator shows satisfactory result in compensating the fluctuation of PV power output and in maintaining a constant power output of the SMGS.