Integration of information, communication and materials technologies into the electricity Smart Grids is the key to sustainable clean energy future. This study focuses on materials innovation and design of power transmission lines. Conventional bi-material power transmission lines consist of aluminum conductors with steel reinforcement. Increase in temperature of transmission lines due to Joule heating limits their current carrying capacity and the efficiency of power transmission. New design of transmission wires proposed in this study consists of carbon nanostructure (CNS)-epoxy composites in a multilayered architecture to enable multifunctional capabilities. Excellent thermal transport properties of CNS-epoxy composites are utilized to optimally dissipate heat from the outer surface of transmission wire in order to maximize its performance. A coupled electrical-thermal finite element (FE) analysis of Aluminum Conductor Steel Reinforced (ACSR) wires is performed and the results are benchmarked with those obtained from relevant IEEE standards. The validated model is then extended to new transmission line composed of aluminum conductor - composite core with CNS-epoxy composite coating (ACCC-CNS). Steady-state coupled FE analyses of ACSR and ACCC-CNS wires indicate that the proposed design of ACCC-CNS wire enables transmission of larger currents than an equivalent ACSR wire for the same amount of conductor material due to reduced operating temperature. The proposed design of power lines would enable development of Smart Grids for more efficient utilization of electricity from renewable sources.