This paper presents the hourly mean solar radiation and standard deviation as inputs to simulate the solar radiation over a year. Monte Carlo simulation (MCS) technique is applied and MATLAB program is developed for reliability analysis of small isolated power system using solar photovoltaic (SPV). This paper is distributed in two parts. Firstly various solar radiation prediction methods along with hourly mean solar radiation (HMSR) method are compared. The comparison is carried on the basis of predicted electrical power generation with actual power generated by SPV system. Estimation of solar photovoltaic power using HMSR method is close to the actual power generated by SPV system. The deviation in monsoon months is due to the cloud cover. In later part of the paper various reliability indices are obtained by HMSR method using MCS technique. Load model used is IEEE-RTS. Reliability indices, additional load hours (ALH) and additional power (AP) reduces exponentially with increase in load indicates that a SPV source will offset maximum fuel when all of its generated energy is utilized. Fuel saving calculation is also investigated. Case studies are presented for Sagardeep Island in West Bengal state of India.