According to the International Energy Agency 2016 statistics, Ethiopia is among the lowest countries in annual electricity consumption, 70 KWh/capita. Rural areas hold more than 80% of the country’s population and less than 30% of them have been electrified. Most of the population (the rural areas) still predominantly depend on traditional biomass energy sources for cooking and heating, and household lights are provided mainly by kerosene and biomass including this study area, Tadacha Rarasa, which consist of 4100 households with 6 members, totally 24,600 people[1, 2]. The feasibility study of hybrid system consisting of small Hydro, PV, Wind and Battery is carried out using HOMER as a tool for optimization and sensitivity analysis. TURBNPRO software also assists for the optimization of the small hydropower which is suggested to utilize the 2.2 m3/s ecological flow of the Genale 3 multipurpose hydropower plant’s reservoir. The wind speed and solar radiation data of the site is collected from NASA. Then, the wind speed, solar radiation, electric load and hydro data is input to HOMER in their respective appropriate format for simulation and analysis of the proposed hybrid system.  Electric loads of the community is estimated bearing in mind the irrigation, fishery and other opportunities which will arise after the multipurpose project completion in addition to basic household demands. The daily average estimated residential consumption by each family is 9.118 kWh and the daily average total energy consumption per person is 1.872 kWh.   After optimization and sensitivity analysis using HOMER, several different feasible configurations of Hydro, PV, Wind and Battery hybrid system has been displayed with a range of 0.049 to 0.067 $/kWh cost of energy. The optimum configuration becomes Hydro/PV/Battery hybrid system with 0.049 $/kWh levelized COE which is closer to the national energy tariff, 0.032 USD/kWh. The optimum Hydro/PV/Battery hybrid system generates annually 18,647,372 kWh with 0.18% capacity shortage and 0.15% unmet load. The hydropower supports the base load and the PV supplies for the peak load demand in the daytime which shares 19% of the total electric production.