Shift of the focus from bulk generation to distributed generation is an established global trend in the power sector. Further the mode of distributed generations is shifting from dependence on fossil fuels to renewable sources. These sources are intermittent in nature and their generation pattern does not match the load pattern there by creating a need for a battery storage system. In this context, energy management presents itself as inevitable challenge in operating a grid connected distributed renewable sources. The challenge is due to factors such as intermittency of source, time of the day prices, sizing of solar panels and battery, limitations of charging and discharging rates of the battery. To address these, in this paper, an algorithm for energy management of grid-connected rooftop solar with battery storage is proposed. The objective is to maximize the savings in electricity bill by decreasing the power drawn from the grid during high grid prices. The charge controller of battery uses this algorithm for making decision on charging or discharging of the battery or keeping it in idle mode. The algorithm is coded in MATLAB and tested with realistic demand patterns and solar generation patterns of data representing a duration of 30 days. The obtained results show effective savings on electricity bill monthly. The optimal selection of number of solar panels, battery size has also been presented. The proposed algorithm helps in effectively deriving the potential benefits of grid connected rooftop solar system with battery storage. © 2016 IEEE.