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• Distributed generation using local renewable resources is studied. • Economic assessment is performed. • Investment risk analysis is carried out. • Environmental impact assessment of the combinations is evaluated using LCA. • MCDM approach is used for optimal solution selection. Increasing renewable share in power supply is currently a global mission. Decentralized renewable power with locally available resources is an emerging preferred sustainable energy solution. This is even more recommended for remote locations where reliable grid power is neither available nor feasible. However, insufficient availability and intermittency of local renewable resources, cost of unit electricity and reluctance of investors due to uncertainty in return on investment in new technologies are some of the critical issues to be addressed. A detailed environmental impact assessment is also needed. Considering the research gap, this study aims to find technically efficient, economically optimal with less uncertainty on return on investment and environmentally benign energy combinations for distributed generation. The methodology proposed in this paper integrates techno-economic optimization with uncertainty analysis in return on investment through Monte Carlo analysis and environmental impact assessment using life cycle assessment to explore an even better sustainable solution. A multi criteria decision making approach is then adopted to decide a final optimum solution for three multi criteria of cost, uncertainty in return on investment and environmental impact. Such a comprehensive analysis for an optimum solution is demonstrated for a remote village of India. The analysis result shows that the combination of solar photovoltaic-diesel generator-Battery system is the possible optimum solution with a cost of electricity of $0.21/kW·h, a standard deviation of 0.07 for risk on investment and a moderate environmental impact. [ABSTRACT FROM AUTHOR]