From the perspective of global warming mitigation and depletion of energy resources, renewable energy such as wind generation (WG) and photovoltaic generation (PV) are getting attention in distribution systems. Additionally, all-electric apartment houses or residence such as DC smart houses are increasing. However, due to the fluctuating power from renewable energy sources and loads, supply-demand balancing of power system becomes problematic. Smart grid is a solution to this problem. This paper presents a methodology for optimal operation of a smart grid to minimize the interconnection point power flow fluctuation. To achieve the proposed optimal operation, we use distributed controllable loads such as battery and heat pump. By minimizing the interconnection point power flow fluctuation, it is possible to reduce the electric power consumption and the cost of electricity. This system consists of photovoltaic generator, heat pump, battery, solar collector, and load. To verify the effectiveness of the proposed system, results are used in simulation presented. (C) 2011 Elsevier Ltd. All rights reserved.