The increasing complexities of hybrid energy Microgrid (H-Microgrid) integrated with renewable generations, dispatchable distribution generators (DGs) and low-carbon buildings require more intelligent dispatch method. The building sector occupies the main body of the energy consumption, which represents a major potential contributor for reducing the daily operating cost of the H-Microgrid. In this paper, a building based virtual energy storage system (VESS) model was developed by utilizing the heat storage capability of the building. Then, a dynamic economic dispatch (DED) model of the H-Microgrid considering the VESS was developed. Finally, the VESS was integrated into the DED model of the H-Microgrid for daily operating cost reduction. The indoor temperature of the building was adjusted within the customer temperature comfort range to manage the charging/discharging power of the VESS. Numerical studies demonstrate that the proposed DED method can make full use of the available capacity of VESS to reduce the daily operating cost, and guarantee the customer temperature comfort level at the same time. (C) 2016 Elsevier Ltd. All rights reserved.