This paper discusses mainly the requirements of enhanced IEC 61850 security parameters for smart grid. Since IEC 61850 has been specified in 2003, smart grid was developed rapidly. This modern grid requires reliable, flexible, efficient and secured communication standards. Recent researches confirm that IEC 61850 meets the first three requirements, yet its security is still an issue due to certain factors, such as threats from the internet because of the mapping to TCP/IP stack and the duration of handshake process. First section of the research states a literature of IEC 61850 and its performance in smart grid. Second section outlines an overview of IEC61850 security issues as well as the current smart grid security requirements. Third section outlines possible solutions to increase IEC 61850's security in order to meet these requirements based on laboratory tests and results. fourth section handles a discussion of the innovated security standard IEC 62351 that will be the future solution for IEC 61850 security issues.