Decentralized electricity generation by renewable energy sources is considered as a solution for remote area's electrification. This study proposes an integrated PV/wind hybrid system, with battery storage and diesel generator as a backup. Optimization method utilizes the iterative optimization technique following the loss of power probability and the cost of electricity for power reliability and system costs. The optimal size of hybrid energy conversion system founded in this study can be performed technically and economically according to the system reliability requirements. In addition, a sensitivity analysis was carried out on the PV contribution as the most important parameters influencing the economic performances of the hybrid system.