In this paper, a system comprising a solar photovoltaic (PV)/micro-hydropower/battery bank/converter has been designed, modelled, simulated, and optimized for the rural area of Wimana village, Rwanda. The total load has been fairly estimated for the residential electric utility needs. To satisfy the load demand, solar photovoltaic (4 kW) and microhydro (15 kW) power capacity were considered as the main sources of energy to supply electricity. Either in peak load times or during low generation of primary sources, storage battery banks can also be discharged. The simulation and optimization were done based on the load demand, climatic data, the economics of integrated system components, and other parameters in which the total net present cost has to be minimized to select an economically feasible and technically capable hybrid power system. Based on the load profile of the data collected for the village, the daily energy consumption was found to be 180.99 kWh/day with a peak load demand of 18.56 kW. The net present cost and the cost of energy for the optimized power system amount to $78,763.26 and $0.0757/kWh respectively. HOMER Pro simulating software tool was used to design optimal off-grid and energy management systems.