This study examines efforts to reduce fuel oil (BBM) consumption through dieselization reduction (dedieselisasi) in Diesel Power Plants (PLTD), which are commonly used in remote areas and isolated power systems. The study evaluates the optimal configuration of a Hybrid Power Plant (PLTH) on Tabuan Island using technical, economic, and environmental sustainability approaches to meet the energy needs of 495 household customers with an average daily consumption of 1,223 kWh. Three configuration scenarios are analyzed: DG (Diesel Generator) only, a combination of DG + PV (Photovoltaic), and a combination of DG + PV + BS (Battery Storage). The results show that the DG + PV + BS option is the most cost-efficient and environmentally friendly, with a Net Present Cost (NPC) of Rp 12,457,500,000 and a Cost of Energy (COE) of Rp 1,959/kWh, both lower than the DG-only and DG + PV options, and achieving a renewable energy fraction of 52.6%. This system successfully reduces carbon emissions by 167,837 kg/year and offers a payback period of 5.6 years. Interest rate variations significantly impact the project’s economic feasibility. These findings support the transition from conventional diesel systems to sustainable hybrid systems in line with the government’s Net Zero Emission target by 2060. Future research is recommended to integrate advanced energy management systems to further improve the performance and efficiency of hybrid systems in remote areas.