The practicality of any particular distributed generation installation depends upon its ability to reduce overall energy costs. A simple yet effective economic dispatch strategy with the goal to use distributed generation to minimize the cost of building energy is developed in this work. The strategy is designed to reduce the individual utility, operations and maintenance charges that increase the cost of energy. Various electric rate structures are modeled in detail and applied with the economic dispatch strategy to simulate meeting various measured building demand dynamics for heat and power. Using the economic dispatch strategy, various modes of operation, such as electric or thermal load following, peak shaving, peak shifting, or base-load operation are simulated. The economic dispatch strategy is compared to more traditional dispatch strategies to demonstrate its effectiveness in reducing total energy costs. (C) 2014 Elsevier Ltd. All rights reserved.