This paper deals with design of hybrid energy system consisting of wind and photovoltaic with battery storage. A diesel generator is added to ensure continuous power supply and to take care of intermittent nature of wind and photovoltaic. The paper reports results of the technical–economic optimization study of photovoltaic/wind/diesel hybrid with battery storage in Algeria. The primary objective of this study is to estimate the appropriate dimension of stand-alone hybrid photovoltaic/wind/diesel with battery storage that guarantee the energy autonomy of typical remote consumer with lowest cost of energy. A secondary aim is to study the impact of renewable energy potential quality on the system size. The optimum dimensions of the system are defined for six sites in Algeria. In this context, a complete sizing model is developed in Matlab/Simulink V.6.5, able to predict the optimum system configuration. The simulation results indicate that the hybrid system is the best option for all the sites considered in this study. Thus, it provides higher system performance than photovoltaic or wind alone. It s shown that the principal advantage of photovoltaic/wind/diesel hybrid with battery storage are used all together, the reliability of the system is enhanced. The economic analysis has resulted in the calculation of kWh cost of energy for different types of resources and optimized cost of hybrid energy system. It s revealed too that the energy cost depends largely on the renewable energy potential quality. So, our objective for the optimization parameters is not the production cost but the offered service.