A new microgrid architecture suitable for rural electrification of remote hamlets is proposed. The proposed architecture utilizes a new system design that caters both energy as well as the water needs of the community. An intuitive Solar Photovoltaic (SPV) arrangement using a changeover switch is introduced to meet both lighting and water pumping requirements. Before implementation, a feasibility study is made for proposed Mid-way architecture using MATLAB/Simulink and the results are compared with existing architectures. The computed results indicate that the proposed architecture achieves the lowest voltage drop of 1.7 V and an energy loss of 4.2 Wh compared to other architectures. Further, to validate the system effectiveness an economic analysis is also performed in a practical viewpoint. To demonstrate the prophecy of the proposed architecture, the DC microgrid system is practically installed at Gundichattanahalli village, Karnataka. Besides, an efficient energy management system (EMS) on IoT platform for remote monitoring and control is also integrated with Mid-way architecture. Both simulation and real time system implementation ascertains system suitability for electrification of remote village or hamlets and its sustainable development. © 2021 John Wiley & Sons Ltd.