Solar and wind energy data available for Oman indicate that these two resources are likely to play an important role in the future energy generation in this country. In this paper, a model is designed to assess wind and solar power cost per kWh of energy produced using different sizes of wind machines and photovoltaic (PV) panels at two sites in Oman, which then can be generalised for other locations in Oman. Hourly values of wind speed and solar radiation recorded for several years are used for these locations. The wind profiles from Thumrait and Masirah island are modelled using the Weibull distribution. The cost of wind-based energy is calculated for both locations using different sizes of turbines. Furthermore, this paper presents a study carried out to investigate the economics of using PV only and PV with battery as an energy fuel saver in two villages. The results show that the PV energy utilisation is an attractive option with an energy cost of the selected PV ranges between 0.128 and 0.144 $/kWh at 7.55% discount rate compared to an operating cost of 0.128-0.558 $\kWh for diesel generation, considering the capital cost of diesel units as sunk.