This thesis is a study on integration of photovoltaic generators into an existing diesel-unreliable grid connected system at the Lebanese village of Khiam. The main goal of implementing PV-diesel hybrid system is to reduce diesel consumption and the import of fossil fuel used in electricity power supply. Before designing the system, it is necessary to create a load profile for 120 households and pre-design the size of the PV generator, the capacity of storage system and inverter type/size selection. The load profile data is based on the average of monthly energy consumption gathered from Khiam village households. Detailed simulations and financial analysis are performed with HOMER to compare different systems and their viability. The simulations include four different designs starting from the existing system, diesel generator with unreliable grid, followed by PV generator and unreliable grid, PV and diesel generator and ended with the complete hybrid system. Once the Hybrid system is determined a detailed design is done to optimize the lowest cost PV-diesel hybrid system. The final simulated PV-diesel hybrid system is suggested with a PV capacity of 270 kWp, existing diesel capacity with 200 kVA, an inverter output of 115 kW and battery bank nominal capacity is 1872 kWh. The system renewable fraction is 53% and the project life cycle is 25 years. The PV-diesel hybrid system is projected to produce electricity at a cost of 0.12 USD/kWh. This cost is significantly lower than the 0.26 USD/kWh paid to the diesel operator, as well as lower than 0.13 USD/kWh paid to the utility grid. In addition, and according to the given information from the owner, an estimated diesel consumption of 104000 ltr/year, the simulation result shows diesel consumption at 40000 ltr/year. The reduced carbon dioxide production by 65%, from 776 to 272 tons per year, provides further justification for the PV installation in a commercial PV-diesel hybrid system.