India has a large number of remote small villages and islands that lack in the electricity, and probability of connecting them with the high voltage gridlines in the near future is very poor due to financial and technical constraints. The main electrical load in these villages is domestic. In this paper a study has been presented for sustainable development of renewable energy sources to fulfill the energy demands of a remote island having a cluster of five villages. The total potential of electricity from these resources is estimated to be equivalent to 3530kWh/day whereas demand is only 2310kWh/day with an installed capacity of 450kW, which is sufficient to replace the existing power generation system dominated by diesel operated system.