The home power management system is proposed with the objective to reduce the electricity cost and home also to avoid the problem of high peak demand. Recently more methods have been discussed in the area of Home energy management, but prioritizing the operation of power units from customer point of view has its own benefits depending on the comfort level. The Proposed' home consists of a smart electrical appliance, photovoltaic system with battery, smart communication network and a robust controller. This controller schedules the power units in response to electricity price at the Time of Use (ToU). The available power units comprising of solar power, battery power, grid supply and the utilization of home appliance are categorized and monitored regularly. The Primary power units, preferably solar are chosen automatically as per the priority of the customer. When the primary power unit (solar) is not able to supply power, due to its intermittent nature of generation, the controller shifts to next power units accordingly. The simulation results show that the proposed system based on Home Energy Management (HEM) algorithm reduces the electricity cost, peak demand problem and enhances the efficiency of energy use. The Time of Use (ToU) is considered for reducing the peak demand. The smart controller is operated based on HEM algorithm and selects the power units accordingly. Also, there is a necessity of Energy conversion from DC (solar) to AC (grid/appliance), there is feasibility of power quality disturbance. This quality of power is improved by using Selective Harmonic elimination (SHE) method. The proposed system is developed and simulated in MATLAB/SimPowerSystem (SPS). (C) 2016 Elsevier B.V. All rights reserved.