This article has been accepted for inclusion in a future issue of this journal. Content is final as presented, with the exception of pagination. IEEE TRANSACTIONS ON SMART GRID 1 An Optimal Dispatch Algorithm for Managing Residential Distributed Energy Resources Hossein Karami, Mohammad Javad Sanjari, Seyed Hossein Hosseinian, Senior Member, IEEE, and G. B. Gharehpetian, Senior Member, IEEE Abstract—This paper deals with a residential hybrid thermal/electrical grid-connected home energy system, including a fuel-cell with combined heat and power (CHP) and a battery as energy storage system (ESS). A day-ahead scheduling algorithm for managing different resources is developed to generate an efﬁ- cient look-up table that determines an optimal operation schedule for the distributed energy resources at each time interval, so that the operation cost of a smart house is minimized. The impact of the electricity tariff and the efﬁciency of the energy storage system are considered when optimizing the operation schedules. Index Terms—Battery efﬁciency, combined heat and power (CHP) system, electricity tariff, scheduling optimization, smart home. NOMENCLATURE Fuel cell startup cost. Fuel cell shut down cost. Maximum limit of fuel cell generated power. Minimum limit of fuel cell generated power. Upper limit of ramp rate of fuel cell. Lower limit of ramp rate of fuel cell. T Length of time interval. Initial energy available in battery. Available energy in battery. Efﬁciency of battery charging. Efﬁciency of battery discharging. Maximum energy limit of battery. Minimum energy limit of battery. Maximum limit of battery charging rate. Maximum limit of battery discharging rate. Maximum value of utility purchasing electricity cost per kW. Cost of purchasing natural gas per kW. Total cost of fuel cell. Manuscript received June 19, 2013; revised July 28, 2013, November 01, 2013, January 16, 2014, and March 19, 2014; accepted April 30, 2014. Paper no. TSG-00463-2013. The authors are with the Department of Electrical Engineering, Amirkabir University of Technology, Iran (e-mail: hkp6785@gmail.com; m_j_san- jari@aut.ac.ir; hosseinian2001@yahoo.com; grptian@aut.ac.ir). Color versions of one or more of the ﬁgures in this paper are available online at http://ieeexplore.ieee.org. Digital Object Identiﬁer 10.1109/TSG.2014.2325912 Total cost of utility. Total cost of battery. Total cost of purchasing gas. Heat power produced by fuel cell. Electrical power produced by fuel cell. Efﬁciency of fuel cell. Heat power produced directly from gas. Normalized price of electricity tariff. Purchased power from utility by home. Operation and maintenance cost of battery per kW. Output power of battery. Electrical load demand. Thermal load power. Part Load Ratio. Electrical to thermal power ratio of fuel cell. Number of interval that appears as variables subscript and indicates value of that variable in -th interval. I. INTRODUCTION E LECTRICAL and thermal demands in a home energy system can be provided by cogeneration systems. The Combined Heat and Power (CHP) system is a major part of the integrated energy system. A large number of studies around the world have been devoted to studying its application in energy systems [1]–[6]. CHP has been technologically promoted in recent years. An- other side is the problem of establishing experimental blocks, which has been facilitated by setting up appropriate policies [7]–[9]. The use of CHP systems for residential loads will be in- creased if economic operation of the integrated energy system is studied well. Economic operation of a fuel cell (FC)-based CHP system has been studied in [9], [10], in which results of four cases with different recovery heat dispatching have been compared. A combined cooling, heating and power (CCHP) system including a gas turbine and batteries has been inves- tigated in [11]. Its results show that the CCHP system with storage device has great advantages. It has also been demon- strated that efﬁciency of the system decreases gradually with load reduction; however, the system operation cost has not been considered. 1949-3053 © 2014 IEEE. Personal use is permitted, but republication/redistribution requires IEEE permission. See http://www.ieee.org/publications_standards/publications/rights/index.html for more information.