Machine learning models are the backbone of smart grid optimization, but their effectiveness hinges on access to vast amounts of training data. However, smart grids face critical communication bottlenecks due to the ever-increasing volume of data from distributed sensors. This paper introduces a novel approach leveraging Generative Artificial Intelligence (GenAI), specifically a type of pre-trained Foundation Model (FM) architecture suitable for time series data due to its efficiency and privacy-preserving properties. These GenAI models are distributed to agents, or data holders, empowering them to fine-tune the foundation model with their local datasets. By fine-tuning the foundation model, the updated model can produce synthetic data that mirrors real-world grid conditions. The server aggregates fine-tuned model from all agents and then generates synthetic data which considers all data collected in the grid. This synthetic data can be used to train global machine learning models for specific tasks like anomaly detection and energy optimization. Then, the trained task models are distributed to agents in the grid to leverage them. The paper highlights the advantages of GenAI for smart grid communication, including reduced communication burden, enhanced privacy through anonymized data transmission, and improved efficiency and scalability. By enabling a distributed and intelligent communication architecture, GenAI introduces a novel way for a more secure, efficient, and sustainable energy future.