A power system grid is decomposed into several parts and decomposed state estimation steps are executed separately, on each part, using coordinated feedback regarding a boundary state. The achieved solution is the same that would be achieved with a simultaneous state estimation approach. With the disclosed approach, the state estimation problem can be distributed among decomposed estimation operations for each subsystem and a coordinating operation that yields the complete state estimate. The approach is particularly suited for estimating the state of power systems that are naturally decomposed into separate subsystems, such as separate AC and HVDC systems, and/or into separate transmission and distribution systems.