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Microgrid equipped with heterogenous energy resources and a bank of energy storage devices presents the idea of small scale distributed energy management (DEM). DEM facilitates the minimization of the transmission and operation costs, peak load and environmental pollution. Microgrid also enables active customer participation by giving them the access to the real time information and control. The capability of fast restoration against physical/cyber attack, integration of renewable energy resources and information and communication technologies (ICT) make microgrid as an ideal candidate for distributed power systems. The energy management system of microgrid can perform real time energy forecasting of renewable resources, energy storage elements and controllable loads in making proper short term scheduling to minimize total operating costs. Cost benefit analysis of microgrid reveals that cooperation …