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This paper evaluates the feasibility of using a hybrid system consisting of wind and tidal turbines connected to a microgrid for power supply to coastal communities that are isolated from a main supply grid. The case study is Stewart Island, where the cost of electricity, provided by a central diesel power station, is higher than the grid network in New Zealand. Local residents believe that reducing the consumption of diesel and having a renewable source of electricity generation are two of the island’s highest priorities. Merging a tidal energy source (predictable) with wind (unpredictable) and diesel (back-up), through a microgrid, may be a way to increase reliability and decrease the cost of generation. Several off-grid configurations are simulated using HOMER and WRPLOT software. Using two wind and four tidal turbines, plus one diesel generator for back-up, is the best design in terms of lower greenhouse gas emissions, higher renewable fraction, and reduced net present cost.