In the present scenario, the utilities are focusing on smart grid technologies to achieve reliable and profitable grid operation. Demand side management (DSM) is one of such smart grid technologies which motivate end users to actively participate in the electricity market by providing incentives. Consumers are expected to respond (demand response (DR)) in various ways to attain these benefits. Nowadays, residential consumers are interested in energy storage devices such as battery to reduce power consumption from the utility during peak intervals. In this paper, the use of a smart residential energy management system (SREMS) is demonstrated at the consumer premises to reduce the total electricity bill by optimally time scheduling the operation of household appliances. Further, the SREMS effectively utilizes the battery by scheduling the mode of operation of the battery (charging/floating/discharging) and the amount of power exchange from the battery while considering the variations in consumer demand and utility parameters such as electricity price and consumer consumption limit (CCL). The SREMS framework is implemented in Matlab and the case study results show significant yields for the end user. © 2018, Higher Education Press and Springer-Verlag GmbH Germany, part of Springer Nature.