###### Abstract
[15] presented a review of optimal planning tools considering investment and operation costs, meeting technical and emission constraints, and optimal sizing renewables. On the other hand, [PERSON] et al. [16] proposed a novel peak load shaving algorithm for an isolated PV/battery microgrid system. However, excess energy, peak load handling, initial capital cost and optimal sizing are still controversial in PV/battery systems. The optimal sizing of an off-line microgrid system using multiobjective simulated annealing particle swarm optimizer was proposed in [17]. However, the study mainly considers batteries and diesel generators to increase system reliability. [PERSON] et al. [18] carried out a comparative analysis of hybrid renewable power system for off-grid rural electrification in Nigeria. According to the analysis a hybrid hydro/PV/wind/diesel/battery system with 77.4% renewable fraction was proposed for that specific site. [PERSON] et al. [19] tried to optimize a hybrid off-grid renewable power system for rural communities in Benin, and the PV/diesel/battery system was the least costly system identified in the analysis. The study also indicated a 70% battery size reduction compared to PV/battery system. A co-optimization scheme using the Lagrange multiplier method for distributed energy resource planning in community microgrids was carried out in [20]. The study optimized the total annualized cost at the maximum fuel saving. [PERSON] et al. [21] proposed an off-grid hybrid power system for the village named Golbo II, in Ethiopia. According to this study, the PV/wind/diesel/battery system with a cost of energy of USD 0.207/kWh was the optimal solution. Similar studies taking into consideration the load demand and the environmental conditions of specific sites have been conducted in [12; 22; 23; 24]. In accordance with worldwide trends, the Government of Ethiopia has set key targets for its energy sector, with the goal of providing electric power to all citizens by the end of 2030 [25]. The government has a vision to provide high quality energy services to all sectors of the economy, as well as to export power to neighboring countries via the East African Power Pool [26]. Renewable energy sources such as hydropower, photovoltaics, wind, and geothermal energy have been identified as promising possibilities for Ethiopia's energy security and environmental management in order to mitigate the harmful consequences of climate change [26; 27]. However, rural electrification in the remote areas and small islands of Ethiopia through grid extension demands a huge capital investment because of the dispersed population, and difficult geographic terrain. According to the IEA, African energy outlook 2019 special report, Ethiopia has an electricity access rate of only 45%; nearly 60 million people do not have access to electricity [28]. Only 11% of the population has access to electricity through decentralized solutions, mainly from stand-alone diesel and PV. Considering the research gaps and the real problem on the ground at the specified site, the authors proposed optimal sizing and techno-economic analysis of the minigrid hybrid renewable energy system in comparison with grid-extension and diesel power generation for Kibran Gabriel island of Ethiopia. In addition to the optimal minigrid system, e.g., other alternative configurations, the pollutant emission gases that can be reduced, the optimal system sensitivity to the variations of GHI, load consumption and diesel price are addressed in the analysis. The remainder of this paper is organized as follows: Section 2 describes materials and methods, whereas in Section 3 resources and demand of the case study are presented. Minigrid hybrid system discerptions, and component cost and financial assumptions are discussed in Sections 4 and 5, respectively. The simulation results and discussion are provided in Section 6, then a brief conclusion follows in Section 7.