Presently, the world is considering renewable solar energy as an indispensable/long-term/nature-friendly option for power generation. The Kingdom of Saudi Arabia (K.S.A) is blessed with considerable amount of solar radiation. Commercial/residential buildings in K.S.A. consume about 10–45% of the total electric energy. In the present paper, the economic analysis of utilization of hybrid PV–diesel-battery power systems to meet the load of a typical residential building (with annual electrical energy demand of 35,120kWh) in different provinces/zones of K.S.A. has been studied by analyzing long-term solar radiation data. Five geographically distinct sites representing different provinces of the Kingdom have been selected. The monthly average daily solar radiation of K.S.A. varies from 3.03–7.51kWh/m2. NREL's (HOMER Energy's) HOMER software has been employed to perform the analysis. The simulation results indicate that for a hybrid system composed of 4kWpPV system together with 10kW diesel system and a battery storage of 3h of autonomy (equivalent to three hours of average load), the PV penetration is 22%., 21%, 22%, 20%, and 20% at Abha (Southern Province), Hofuf (Eastern Province), Qurayat (Northern Province), Taif (Western Province), and Riyadh (Central Province) respectively. The cost of generating energy (COE, US$/kWh) from the above hybrid system has been found to be 0.179$/kWh, 0.179$/kWh, 0.178$/kWh, 0.180$/kWh, and 0.181$/kWh at Abha, Hofuf, Qurayat, Taif, and Riyadh respectively. For a given hybrid system, the PV penetration is higher in Sourthern and Northern Province as compared to other provinces. Also, the study has examined the impact of PV penetration on: carbon emissions (Tons/year), diesel fuel consumption, Net Present Cost, cost of energy, etc. Furthermore, for a given hybrid configuration (for Northern Province), the study exhibits that increase in PV capacity results in decrease in the diesel-fuel-consumption/carbon-emissions and increase in COE./NPC/excess-energy.