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Summary: The hybrid renewable energy system (HRES) can overcome the problem of the mismatch of supply of variable renewable energies and demand. The optimal sizing of the HRES methodology is implemented by employing the generalized reduced gradient (GRG) method. A case study of HRES with solar, bio, and hydro sources for tribal areas in a hilly region of India is demonstrated. Both the grid-connected scenario and the standalone scenario in island mode are simulated. The optimal LCOE of 0.106–0.053 $/kWh is achieved in standalone mode for 100%–70% reliability. The grid-connected scenario is simulated with two different rates of payment for the electric energy delivered to the grid and a range of grid purchase prices. The LCOE results to around 0.06 $/kWh for the prospective grid-connected mode cases. The sensitivity analysis and validation of the work are also performed.