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–This paper deals with the optimal sizing of a hybrid photovoltaic-battery storage system for home energy management considering reliability against grid outages and demand response. To that end, a novel optimization framework is developed which aims at minimizing the electricity bill while the reliability of the system is ensured for certain common outages. In order to ensure the accuracy of the results, a large amount of characteristic outages along with demand, solar irradiance and temperature profiles are generated from real data. Clustering techniques are used for reducing this data to those most characteristics profiles and manage with the unpredictable behaviour of the outage events. Demand response is incorporated via different incentives like tariffs based on time of use and real time pricing, along with the optimal scheduling of different typical deferrable appliances. A case study on a smart-prosumer …