In view of growing concerns of global warming and depleting oil/gas reserves, many nations are considering use of hybrid photovoltaic-diesel technology as an option for power generation The Kingdom of Saudi Arabia has higher level of solar radiation and is a prospective candidate for deployment of solar photovoltaic systems. Literature indicates that commercial/residential buildings in the Kingdom consume about 10-45% of the total electric energy generated. The aim of this study is to analyze solar radiation data in city of Yanbu to assess the technoeconomic feasibility of utilizing hybrid photovoltaic-diesel-battery power systems to meet the load of a typical residential building. The monthly average daily solar global radiation ranges from 3.61 to 7.90 kWh/m2 . National Renewable Energy... Laboratory’s HOMER software has been used in the study. The simulation results indicate that for a hybrid system, composed of 4 kWp photovoltaic system together with 10 kW diesel system, and a battery storage of 3 hours of autonomy (average load), the photovoltaic penetration is 21%. The cost of generating energy from that hybrid system has been found to be 0.180 $/kWh. With use of this hybrid system, about 2 tons per year of carbon emissions can be avoided entering into the local atmosphere. Also, for a given hybrid configuration, the operational time of diesel generators has been found to decrease with increase in photovoltaic capacity. The investigation examines impact of photovoltaic penetration on: carbon emissions, diesel fuel consumption, net present cost, cost of energy, etc.