•Proposed strategy is to vary the daily SOC reference level of a centralized battery in a microgrid to follow seasonal variation that is exhibited in solar PV output power. Thereby it reduces the required capacity of the battery at modest degradation rate.•The SOC level of the centralized battery is corrected to its reference value at the end of each day and during ‘SOC restoration period’ where grid interconnection line is at a low loading.•A rule-based strategy is used to control the magnitude and ramp rate of power flows in the grid interconnection link. This is achieved by the flexible control of the charging-discharge of the centralized battery.•The proposed control strategy has resulted in minimum battery capacity and also at the lowest SEI growth rate of the battery. Hence the life period of the battery is expected to increase.•The work is based on the real-time solar PV data measured at a high-frequency sampling rate in the authors’ laboratory. Such data of over several years for the analysis and design of the microgrid-centralized battery is rare to find in the public domain. The focus of this paper is to develop a control strategy for a community battery bank in a grid-connected microgrid in which a significant level of photovoltaic generation is embedded. In order to minimize the capacity of the community battery, the power transfer capacity of the interconnection link between the microgrid and the external grid system is utilized to safe maximum levels. Through Empirical Mode Decomposition analysis of the net power flows of the microgrid, the daily and seasonal modes of the net power oscillations are identified as the two dominant low-frequency components. Whence a rule-based operational strategy is developed to control the power flows of the community battery via a novel dynamic referencing scheme for the state-of-charge of the battery bank. The battery control scheme counteracts the dominant daily and seasonal modes of oscillations of the net power. The numerical calculations performed for a case study shows that the proposed scheme leads to an approximately 16% decrease in the required battery capacity for particular growth rate of solid-electrolyte interphase film in the battery bank. The scheme does not require the forecasting of the net power, and thus, it has an increased degree of robustness when the community battery undertakes the power buffering task.