In the smart grid infrastructure based power systems, it is necessary to consider the Demand Side Management (DSM) to enhance the energy reduction and system control. In many countries the resources are very less so the available resources have to be used in an efficient manner without any loss. The total loss cannot be avoided but it can be reduced. Lot of industries and hospitals need twenty four hour power supply and the organizations like schools and colleges need only day time power supply. Different techniques are used to distribute the power to reduce the losses in smart grid. In the proposed system, Particle Swarm Optimization (PSO) optimization technique is used to distribute the power in the smart grid. Here, the grids are arranged in such a way that the losses in it are reduced. The whole system is rearranged, i.e., the load connected to the grid is rearranged according to their use. It uses a new and stochastic scheduling technique to handle the uncertainties in the power system. Solar and wind power are taken in to account for twenty four hours and the values are given to the PSO algorithm. The experiment was conducted by MATLAB and the results show that the efficiency level of wind and solar power systems was increased by an appreciable level. The proposed technique is compared with the normal system without using DSM and it is clear that the proposed system gives good result than the existing optimized systems. © 2017 IAEME Publication.