Microgrid (MG) system has a vital role in fulfilling the ever increasing electricity demand in the continuously expanding power systems. Significant power can be integrated from Renewable energy sources such as solar, wind and small hydro to MG systems. MG may a distribution power network of either low voltage level or medium voltage level consisting of various energy sources from distributed generations (DG's) such as photovoltaic system, fuel cell, biomass, wind, small hydro, energy storage systems, etc. MG can be a single controllable system which can be operated in islanded mode without connecting to main grid or grid-connected mode. This study presents the design of MG system based on a given load data and available resources for minimum cost of energy, maintenance and replacement. The design is carried out using HOMER Software so as to maximize the energy usage from the DG's instead of grid supply to meet most of the load demand in the MG system. The study presents an approach to an efficient MG system design based on available renewable power generation units for the most efficient distributed energy sources and optimum ratings of the components required to meet the load demand of a known local area. It also presents the techno-economic feasibility study of the MG system so designed. The simulation results and discussions are presented.