This research article presents a comprehensive investigation into the design, optimization, and performance analysis of a hybrid stand-alone microgrid for an industrial facility in Iraq at coordinates 36.51 and 43.99. The system consists of photovoltaic (PV) modules, inverters, a battery energy storage system (BESS), a generator, and AC loads. Leveraging the capabilities of PVsyst version 7.3.1, HOMER Pro version 3.14.2 and SAM version 2022.11.21 software tools, this study assesses the feasibility and functionality of the hybrid stand-alone microgrid. In this study, PVsyst software is used for detailed designing and analysis of a PV plant, and the PVsyst design file is then used in HOMER Pro software to optimize and design the proposed hybrid stand-alone microgrid, and for detailed performance analysis SAM software is employed. This paper also investigates the impact of ground clearance and ground albedo on the annual generation of bifacial PV modules at various tilt angles. Key findings include a promising normalized production rate of 4.53 kWh/kWp/day with a performance ratio of 0.815 and annual energy production estimates of 84.31 MWh (P50), 79.57 MWh (P90), and 78.24 MWh (P95) for monofacial PV modules, highlighting the system’s potential for renewable energy generation. Notably, this research demonstrates the hybrid stand-alone microgrid’s capacity to significantly reduce CO2 emissions, saving approximately 1811.6 tons over a 30-year period, thus contributing to sustainability and environmental conservation goals. Additionally, this study reveals operational challenges during the winter months, necessitating generator support to meet load demands. The successful installation and experimental validation of the hybrid stand-alone microgrid underscore its practical viability and its role in advancing clean energy solutions. This research provides valuable insights into hybrid stand-alone microgrid design, emphasizing its importance in ensuring reliable power supply and environmental stewardship.