<p>Smart grid is a network created through information technology, communication technology and electrical power systems. It is simply a “smarter” power grid which ensures a two-way communication between user and the power supplier. This work proposes a smart microgrid design hybrid renewable energy system based on solar, grid and wind energy resources. The optimization has been performed using homer software programme to get the best and optimal operation system. Hybrid system combines several energy systems together which offer increased energy reliability and security, and carry a large economic opportunity in terms of cost saving. A typical microgrid system would also include intelligent management that interfaces with the equipment via wired or wireless communication protocols. In the present work the optimization model has been developed for the optimal operation of the system. The modelled system collects meteorological and load data from a town. The optimal hybrid system design is realized by satisfying the load demand, nonlinear seasonal variations and equipment constraints. The main focus of the system is on operation of smart microgrids to maximize usage of green energy, reduction of environmental emissions, decrement of levelized cost of electricity and intelligent management of overall system.</p>