Microgrids provide promising solution for integration of renewable energy sources in the electrical grid. To exploit the key benefits, achieving the economical operation of renewable aided microgrids has become necessary and is a challenging task. This paper presents an efficient optimization model to minimize the operational cost of a solar integrated microgrid. We formulate a joint optimization mixed integer problem for appropriate modeling of the system under various practical constraints. An efficient solution is obtained with a distributed approach such that the original problem is solved in two stages. Dual decomposition approach is adopted for cost, emissions, and solar share optimization. Lagrange relaxation, Lambda iteration method, and binary integer programming are employed to obtain the joint optimization solution. Finally, the performance of the proposed model is validated through simulations that show that an overall cost reduction of 4.2070e+04 $ and emission reduction of 7.2001e+03 kg are achieved with the proposed model. © 2019 John Wiley & Sons, Ltd.