Making second-use of retired power battery for energy storage in home smart power systems can increase the life of the power batteries effectively, and achieve the use of resources efficiently. Considering the popularization of household electric vehicles, a capacity optimization scheme for the second-use of retired power battery as household energy storage is proposed. The model of household energy system is established based on household common load, household adjustable load, energy storage system, electric vehicle and household photovoltaic; Taking the cost of second-use battery energy storage system into account, the optimization model of energy storage capacity is constructed, with the minimum power input as the objective function and the operation conditions of the components in the household energy system as the constraints. The optimization steps are analyzed based on improved particle swarm optimization and fuzzy control algorithm. and the feasibility of the proposed model and algorithm is verified by an example. The results show that the second-use of retired power battery as a household energy storage system can effectively reduce the cost.