This paper discusses the design process of a mini-grid hybrid power system with reverse osmosis desalination plant for remote areas, together with an economic analysis and environmental considerations for the project life cycle. It presents a design scenario for supplying electricity and fulfilling demand for clean water in remote areas by utilising renewable energy sources and a diesel generator with a reverse osmosis desalination plant as a deferrable load. The economic issues analysed are the initial capital cost needed, the fuel consumption and annual cost, the total net present cost (NPC), the cost of electricity (COE) generated by the system per kWh and the simple payback time (SPBT) for the project. The environmental considerations discussed are the amount of gas emissions, such as CO2 and NOx, as well as particulate matter released into the atmosphere. Simulations based on an actual set of conditions in a remote area in the Maldives were performed using HOMER for two conditions: before and after the Tsunami of 26th December 2004. Experimental results on the prototype 5 kVA mini-grid inverter and reverse osmosis desalination plant, rated at 5.5 kWh/day, are also presented here to verify the idea of providing power and water supplies to remote areas. (C) 2008 Elsevier Ltd. All rights reserved.