ABSTRACT Ethiopia is a developing country, where majority of the population lives in rural areas without access to electricity. 83% of the total population of the country use traditional biomass energy as a basic source of energy. In contrast, the country is endowed with sufficient renewable energy resources which can be used as a standalone electric energy supply system for electrifying remote areas of the country. These resources are mainly micro hydropower and wind which can be used individually or the best combination of one another. The application of hybrid renewable energy system has become an important alternative solution for rural electrification program. The Modeling and control of a hybrid PV-Wind-Hydro DG system is also addressed. Dynamic models for the major system components, namely, wind energy conversion system, PV energy conversion system, hydro, inverter, and overall fuzzy logic controller units are developed. Then, a simulation model for the proposed hybrid power system has been developed using MATLAB /Simulink environment. This is done by creating subsystem sets of the major dynamic component models and then assembling into a single aggregate model. The overall power management strategy for coordinating and/or controlling the different energy sources is also presented in the thesis work. Generally there are 800 households with total electric demand of 71.6KW.To satisfy this demand 52%, 35% and 13% is to be contributed from wind/hydro/solar respectively. To use the power economically fuzzy logic controller is used. The controller monitors the demand and the available sources and then switches to the appropriate power supply according to the written rules. Simulations have been carried out to verify the system dynamic performance using a practical load profile and weather data. The result shows that the overall power management strategy is effective and the load demand is balanced. To complete this work, a grid extension from the closest substation has been compared with hybrid system. Cost of the grid extension is estimated based on the data obtained from EEP office. This is done in order to compare the cost of the designed hybrid power system against the cost of grid extension. The result shows that breakeven grid extension distance to be 23.9km which indicates that grid extension is preferable.