The objective of this work is to look at the possibility of reducing the use of diesel power generation with hybrid renewable energy systems in remote locations. Minicoy Island of the Union Territory of Lakshadweep (UTL) in India is considered for this research work. It includes a discussion of a wide range of renewable and non-renewable energy sources, energy storage techniques, and how well they work in practice. The primary factor used to compare the economic performance of systems is energy cost. The analysis is conducted using a software program called Hybrid Optimization of Multiple Energy Resources (HOMER). The findings obtained demonstrate the maximum value of return on investment and the penetration of renewable energy sources with the lowest simple payback period and pollutant emission, hence justifying the usefulness of HOMER software. Sensitivity analysis was carried out to identify the most significant factors affecting the economic performances of the systems and to establish a potential future strategy for technological competition.