Interest in alternative energy resources such as wind, solar energy and fuel cell (FC) has been on the increase due to improved public awareness of the high energy cost and adverse environmental impacts of conventional energy sources. Therefore, the rapid growth and potential future demand for these energy sources suggest a need to consider both reliability and cost-benefits of the supply for each case. This paper presents a simulation methodology for reliability and cost assessment of these energy sources in an independent micro-grid (IMG) system, which is a distribution system with distributed energy sources such as micro-turbine, photovoltaic and fuel cells. A systematic technique and a computer program for reliability and cost assessment of the IMG system containing FC, photovoltaic (PV) and wind energy (WE) have been developed. The adequacy of the IMG is evaluated in three steps: (i) atmospheric data is generated for PV and WE in addition to the development of a 50 kW PEM FC generation and energy conversion model, (ii) the power delivered by these energy sources is calculated, and (iii) system adequacy and energy indices are calculated based on the system load balance equation, which is the combination of generated power and system load demand. The suggested technique can then be used to help system planners to provide objective indicators for suitable installation locations, operating policies, and energy type and size selection for IMG system containing alternative energy sources. (c) 2005 Elsevier B.V All rights reserved.