Power generation capacity of Bangladesh needs to be enhanced to support the rising electricity demand. Bangladesh has predominantly used fossil fuel generators for the past decades. Saint Martin's Island and Kuakata are two significant areas that lie at or near the coast of Bangladesh with an average annual solar radiation of 4.81 and 4.65 kWh m−2 day−1, respectively. The monthly average wind speeds at a height of 25 meters are 4.79 and 4.54 m s−1, respectively. Considering this data and the benefits of the optimized hybrid systems, HOMER (Hybrid Optimization Model for Electric Renewable) is used to optimize a system for each of these areas. The costs of energy found from the proposed optimized PV‐wind‐diesel hybrid Energy system for Saint Martin's island and Kuakata are 0.393 and 0.392 USD kW−1 h−1, respectively, the net present cost (NPC) also has been evaluated as 168767.831 USD which are quite reasonable with respect to the present situation in Bangladesh. The major objective of this proposed optimized design is to supply the maximum load demand using renewable sources with the minimum cost of energy (COE) and reduce the burning of fuel and also reduce the emission of CO2. The proposed energy system is able to meet 67.3 and 62.3% load demand using renewable sources, which helps to reduce the GHG (Green Houses Gas) emission by 67 and 64% for Saint Martin's island and Kuakata, respectively when compared to a diesel system. Total load served throughout the year is 33,611 kWh, which is 16% higher than the previously designed system with approximately equivalent COE. © 2016 American Institute of Chemical Engineers Environ Prog, 36: 297–304, 2017
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