The world is witnessing a change-over from its present centralized generation to a future with greater share of distributed generation. Hybrid energy systems are inter-connected with wind power, photovoltaic power, fuel cell and micro-turbine generator to generate power to local load and connecting to grid/micro-grids that decrease the dependence on fossil fuels. The hybrid system is a better option for construction of modern electrical grids that includes economic, environmental and social benefits. An overview of different distributed generation technologies has been presented. This paper puts forward a comprehensive review of optimal sizing, energy management, operating and control strategies and integration of different renewable energy sources to constitute a hybrid system. The feasibility of the different controllers such as microcontroller, proportional integral controller, hysteresis controller and fuzzy controller are presented. The controller is a closed loop feedback mechanism used for power regulation which achieves zero steady state error and the output signal generated from the controller produces desired output response.