This thesis proposes an optimal design process to design hybrid power systems. The process consists of two steps: selection of system components and adjustment of component sizes and power management. We use this process to re-design the green energy house built by China Engineering Consultants, INC (CECI) and discuss the performance improvement by the proposed method. In addition to the design process, we also build the database and simulation design interface to shorten development time by referring to previous designs through the Graphical User Interface (GUI). First, we select the suitable system components, such as power sources and energy storage elements. We analyze the cost and reliability of different energy sources to choose suitable energy sources. And we select the suitable energy storage components that can reduce system cost while satisfying the constraints. Second, we adjust the component sizes and power management to optimize the system cost and reliability. We apply Matlab/SimPowerSystemTM to build the hybrid power model and use the simulation responses to estimate the system’s cost and reliability. We can use the grid method to obtain reference plots and to discuss possible solutions and constraints, or we can apply pattern search to find the optimal solution in a more efficient way. Last, we build the data base and simulation interface by Matlab. The reference plots from the previous designs can be saved and shown by the Matlab GUI. We also build the simulation interface with Matlab GUI so that designers can use these GUIs to develop new systems in the fucture. For promoting green energy, we need to reduce the system cost and improve the system reliability. Good design methods can help achieve these requirements efficiently. We hope that the proposed design process can allow the government and the related industry to develop competitive green energy policies and systems in the fucture.