Off-grid rural electrification programs involving renewable energy provide effective ways to boost the availability of power in remote areas. Herein, the combination of local bio-based building materials with appropriate sizing of a photovoltaic (PV) system to achieve energy-efficient rural housing in developing countries is investigated. The study focused on the fabrication and laboratory testing of a building material incorporating plant fibers, followed by a feasibility analysis of an integrated stand-alone PV system. EnergyPlus software was used to assess the energy-saving potential of bio-based building envelopes, and Homer Pro software was used for techno-economic optimization. Using a case-study building, various configurations were evaluated in terms of levelized energy cost and net present cost. According to the experimental results, the inclusion of 8 wt% Alfa fibers in earth blocks led to a noteworthy enhancement in the thermal resistance and time lag of the building envelope. Specifically, the improvement ranged from 0.549 to 1.125 m2K/W and from 18.5–h to 23.2–h, respectively, compared to using earth alone. This improvement resulted in a substantial decrease in the building's annual energy consumption, with a reduction of 24.3% for heating and 26.7% for cooling. Furthermore, the techno-economic analysis revealed that the electricity provided by a PV-battery hybrid system was 100% renewable and emission-free, with an energy cost of approximately $0.218/kWh and a present net cost of $11,560.21 These findings indicated that combining available solar energy with locally produced bio-based construction materials could be a viable approach for achieving carbon neutrality and building energy-efficient ulta-low-cost rural housing.