As the world population grows rapidly, and the limited amount of fossil fuels begins to diminish along with their impact on the environment, countries have been taking action to promote a greater use of renewable energy resources. In this article, the feasibility of providing electricity from a hybrid power system (HPS) comprising diesel/wind/photovoltaic (PV), and battery considering residential, public, and commercial buildings, consuming the largest portion of energy in Iran is investigated. Tehran, Kish Island, and Binalood are the chosen cities in Iran with distinctive geographic and climatic conditions. In order to determine the optimal design and operational planning of the HPS, the hourly electricity demand data is required to be over 8760 hs during a 1‐yr study. The required hourly data was calculated by employing Carrier (HAP4.5) software. The economic analysis is performed based on net present cost (NPC), cost of energy (COE), diesel consumption, and renewable fraction for all cases by applying HOMER software. Furthermore, sensitivity analyses are carried out to specify the impact of fuel cost on the system by considering two different diesel fuel systems. The results of the economic analysis indicate that Kish Island with warm and temperate climatic conditions would be the optimum zone to install HPS for supplying the energy demand of projected buildings. © 2018 American Institute of Chemical Engineers Environ Prog, 38: 614–623, 2019