In recent years the decentralized rural electrification is becoming cost effective and convenient for areas where grid extension is very difficult. The present paper deals with the electrification of dense forest areas of Uttarakhand state in India by Integrated Renewable Energy Optimization Model (IREOM). The IREOM consists of locally available renewable energy resources such as Micro-Hydropower (MHP), biomass, biogas, wind and solar photovoltaic (SPV) systems have been used to meet electrical energy and cooking energy needs of a cluster of villages. The paper includes the selection of different system components, sizing and development of a general model to find out optimal combination of energy subsystems for the selected study area in order to minimize the cost of energy (COE) generation for a required reliability values. The sizing of different renewable energy system components has been carried out so that they are suitable for four different seasonal load profiles. The two reliability values are considered for the selection of optimum solution of year round application. The model developed for this purpose, has been found to be quite useful in optimizing the renewable energy system sizes that are available in market. The proposed model totally depends on the renewable energy systems and eliminates the use of conventional energy systems.