Global warming and climate change are becoming a global concern. In this regard, international agreements and initiatives have been launched to accelerate the use of renewable energy and to mitigate greenhouse gas (GHG) emissions. Yemen is one of the countries signed on these agreements. However, Yemen is facing the problem that the structure of the power grid is fragile and the power shortage is serious. Accordingly, this paper aims to study the potential for renewable energy in Yemen and assess the technical and economic feasibility of hybrid energy systems. Firstly, this paper introduces the status and challenges of Yemen’s electricity sector, the status of renewable energy, and the status of GHG emission. Secondly, this study proposes the method of optimizing different configurations of off-grid hybrid (solar/wind/diesel engine) energy systems for electrifying various consumers in Taiz province, Yemen under three scenarios of energy strategies. The objective function is to seek the most optimal hybrid energy system that achieves the least cost and most advantageous technical performance, while instigating the best economic scenario of energy strategies. Finally, Homer pro software is used for simulation, optimization, and sensitivity analysis of the designed energy systems. The results found the best economically feasible scenario, the hybrid PV/wind/diesel energy system, among the other scenarios. A photovoltaic (PV)/wind energy system achieved the best technical performances of 100% CO2 reduction, with a 54.82% reduction in the net present cost (NPC) and cost of energy (COE); while the hybrid energy system (PV/wind/diesel engine) achieved the best economic cost of 61.95% reduction in NPC and COE, with a 97.44% reduction of CO2 emission.