In this paper, three distinct distributed energy resources (DERs) modules have been built based on demand side management (DSM), and their use in power management of dwelling in future smart cities has been investigated. The investigated modules for DERs system are: incorporation of load shedding, reduction of grid penetration with renewable energy systems (RES), and implementation of home energy management systems (HEMS). The suggested approaches offer new potential for improving demand side efficiency and helping to minimize energy demand during peak hours. The main aim of this work was to investigate and explore how a specific DSM strategy for DER may assist in reducing energy usage while increasing efficiency by utilizing new developing technology. The Electrical Power System Analysis (ETAP) software was used to model and assess the integration of distributed generation, such as RES, in order to use local power storage. An energy management system has been used to evaluate a PV system with an individual household load, which proved beneficial when evaluating its potential to generate about 20–25% of the total domestic load. In this study, we have investigated how smart home appliances’ energy consumption may be minimized and explained why a management system is required to optimally utilize a PV system. Furthermore, the effect of integration of wind turbines to power networks to reduce the load on the main power grid has also been studied. The study revealed that smart grids improve energy efficiency, security, and management whilst creating environmental awareness for consumers with regards to power usage.