This paper aims to present a novel smart grid adaptive energy conservation and optimization engine for smart distribution networks. The optimization engine presented in this paper tries to minimize distribution network loss, improve voltage profile of the system and minimize the operating cost of reactive power injection by switchable shunt Capacitor Banks using Advanced Metering Infrastructure data. Moreover, it performs Conservation Voltage Reduction (CVR) and minimizes transformer loss. To accurately weight the optimization engine objective function sub-parts, Fuzzification technique is employed in this paper. Particle Swarm Optimization (PSO) is applied as Volt-VAR Optimization (VVO) algorithm. Substantial benefits of the proposed energy conservation and optimization engine include but not limited to: adequate accuracy and speed, comprehensive objective function, capability of using AMI data as inputs, and ability to determine weighting factors according to the cost of each objective sub-part. To precisely test the applicability of proposed engine, 33-node distribution feeder is used as case study. The result analysis shows that the proposed approach could lead distribution grids to achieve higher levels of optimization and efficiency compared with conventional techniques. (C) 2016 Elsevier Ltd. All rights reserved.