The recovery and utilization of oxygen in residential hydrogen energy storage systems significantly impact economic factors. This study introduces an algorithm tailored to optimize oxygen concentration (fraction) across varied operational conditions, encompassing considerations for both efficiency (positive aspect) and lifetime (negative aspect). Initially, an enhanced air supply system (ASS), functioning with oxygen-enriched cathode air, is devised following the forefront scheme. Moreover, a dynamic model is formulated based on MATLAB/Simulink® software for the proton exchange membrane fuel cell (PEMFC) system. The model enables quantitative assessment of system gains in relation to various current densities and oxygen fractions, and its accuracy is partially validated through experimental data. Further, a model correlating stack lifetime to oxygen concentration (fraction) is established using experimental data obtained from other researchers. Finally, the optimal oxygen fractions are determined and managed, with a comparison of the effects before and after optimization. The optimized results indicate a 13% improvement in stack net power at rated operating conditions and a 24% improvement at peak operating conditions, and the system efficiency is improved by 24% and 43% at rated and peak operating conditions, respectively. In addition, the minimum value of system efficiency is observed to be 54%, and there is a notable attenuation of the concentration polarization phenomenon. This approach contributes to mitigating the challenge of lower system efficiency in normal PEMFCs for residential hydrogen energy storage systems (RHESSs) attributed to inadequate gas supply pressure.