Energy Management Systems have become an imperative aspect of smart grids, owing to the enormous challenges imposed due to real-time pricing, distributed generation and integration of intermittent renewables. Due to the uncertainty associated with renewable sources and prominent fluctuations in the load demand, it is extremely important to maintain the overall energy balance in such grids. In this paper, the distributed energy management is achieved using a Multi-agent System which provides a flexible and reliable solution to control and manage smart grids. Adaptive fuzzy systems are designed to instill intelligent decision making capability in the agents of multi-agent system. When renewable sources are inadequate, the sustainability of the system is not guaranteed and multi-agent system is capable of deciding the mode of operation such that the system reliability and performance is not compromised. The proposed algorithm maintains power balance in the system and also sustains desired values for the State of Charge of storage units in order to guarantee extended battery life. The Energy management system also implements a cost optimization algorithm based on the Particle Swarm Optimization technique, to minimize operating costs and maximize profits earned by the grid. The proposed energy management algorithm is tested and validated on a practical test system which inherits most of the features of a small-scale smart grid.
