This paper proposes a generalized formulation to determine the optimal operating strategy and cost optimization scheme for a MicroGrid (MG) for residential application. Genetic Algorithm is applied to the environmental/economic problem of the MG. The proposed problem is formulated as a nonlinear constrained MO optimization problem. Prior to the optimization of the microgrid itself, models for the system components are determined using real data. The proposed cost function takes into consideration the costs of the emissions, NOx, SO2, and CO2, start up costs, as well as the operation and maintenance costs. The MG considered in this paper consists of a wind turbine, a microturbine, a diesel generator, a photovoltaic array, a fuel cell, and a battery storage. The optimization is aimed at minimizing the cost function of the system while constraining it to meet the costumer demand and safety of the system. We also add a daily income and outgo from sale or purchased power. The results demonstrate the efficiency of the proposed approach to satisfy the load and to reduce the cost and the emissions. The comparison with other techniques demonstrates the superiority of the proposed approach and confirms its potential to solve the problem. (C) 2012 Elsevier Ltd. All rights reserved.