The share of renewable energy sources in Algeria primary energy supply is relatively low compared with European countries, though the trend of development is positive. One of the main strategic priorities of NEAL (New Energy Algeria), which is Algeria's renewable energy agency (government, Sonelgaz and Sonatrach), is striving to achieve a share of 10-12% renewable energy sources in primary energy supply by 2010. This article presents techno-economic assessment for off-grid hybrid generation systems of a site in south western Algeria. The HOMER model is used to evaluate the energy production, life-cycle costs and greenhouse gas emissions reduction for this study. In the present scenario, for wind speed less than 5.0 m/s the existing diesel power plant is the only feasible solution over the-range of fuel prices used in the simulation. The wind diesel hybrid system becomes feasible at a wind speed of 5.48 m/s or more and a fuel price of 0.162$/L or more. If the carbon tax is taken into consideration and subsidy is abolished, then it is expected that the hybrid system will become feasible. The maximum annual capacity shortage did not have any effect on the cost of energy, which may be accounted for by larger sizes of wind machines and diesel generators. (C) 2008 Elsevier Ltd. All rights reserved.