Renewable energy sources are utilized for various stand alone applications in the present energy scenario. However, these renewable energy sources are diluted, site specific and also unpredictable in nature. Hence, more than one energy sources are integrated as a Hybrid Energy System (HES) to provide electricity especially for rural areas. When energy sources of different characteristics are integrated as a HES, optimal unit sizing is essential for building a cost effective system. In the present paper, an optimal unit sizing approach based on Genetic Algorithm (GA) is developed for HES. An objective function is formulated to minimize the Cost of Energy (CE) subject to various constraints. A case study is conducted for the design of an optimal HES using developed optimization approach and the results are compared with that of HOMER. © 2014 IEEE.