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Off‐grid renewable energy systems are a solution for power generation in areas where access to the grid is not possible or cost‐effective; in particular, low population rural areas located far away from grid lines or in rugged terrains. Furthermore, over‐reliance on fossil fuels for supplying global energy demand has led to the depletion of nonrenewable resources and environmental issues. This paper presents a feasibility assessment of an off‐grid hybrid renewable energy system for a remote rural area in Kohgiluye and Boyer‐Ahmad Province in Iran. Regarding the available energy resources in the region, a photovoltaic (PV)‐biomass energy system is considered. HOMER Pro software is utilized to find the optimized sizing of the PV‐biomass system to fulfill this load demand. The objective function in this optimization is the system's total net present cost. Due to the rapid fluctuation of economic factors in the country, several rates of inflation and discount rate are considered to investigate their influence on the costs of the system. The optimization result for the current inflation rate of 40% and the discount rate of 18% in the country proposes a hybrid energy system consisting of a 3 kW biogas‐fueled generator, 4.74 kW PV, 10 kWh battery, and 2.07 kW converter to meet the 2.64 kW peak load and 14.53 kWh/day consumption of the community. The total net present cost and cost of energy are $93,057 and 0.0933 $/kWh, respectively. Finally, the environmental assessment of the proposed hybrid system shows an annual CO2 emission of 2.95 kg, which means 99.9% CO2 emissions mitigation compared to a conventional coal‐based electrical plant. [ABSTRACT FROM AUTHOR]