The energy balancing problem is the main challenge for the effective application of micro combined heat and power (m-CHP) in a residential context. Due to its high energy density and relative robustness, the lead-acid battery is widely used for power demand management to compensate the mismatch between the m-CHP electrical output and domestic demand. However, batteries are not suited to respond effectively to high frequency power fluctuations, but when coupled to the m-CHP, they experience frequent short-term charge/discharge cycles and abrupt power changes, which significantly decreases their lifetime. This paper addresses this problem by hybridising the lead-acid battery storage with superconducting magnetic energy storage (SMES) to form a hybrid energy storage system (HESS) that is coordinated by a novel sizing based droop control method. The control method for the first time considers both the capacity sizing of the HESS technologies and the droop control method of the battery and the SMES. A hardware in the loop test circuit is developed coupling with the real time digital simulator (RTDS) to verify the performance of the HESS with the new control algorithm. The experimental results show that control method is able to exploit the different characteristics of the SMES and the battery to meet the mismatch of m-CHP power generation and domestic demand. In addition, the lifetime analysis is implemented in this paper to quantify the battery lifetime extension in the HESS, which further proves the validity of the proposed control strategy.