One of the hardest issues many impoverished and developing countries confront is the absence of electricity in remote and rural areas. In these circumstances, attention toward renewable energy sources as alternatives to produce electric power to contribute to the country’s energy system needs to get momentum, although renewable energy sources are facing the problem of intermittency because of their dependence on climate conditions. To deal with these issues, this study presents an off-grid microgrid renewable energy system comprising of microhydro, solar PV, and batteries in HOMER Pro software for rural areas in Syujak district, Indonesia. Microhydro and solar photovoltaic (PV) are the primary sources to serve load demand, with batteries providing a backup. The optimal result of the hybrid renewable energy system (HRES) configuration has 163 kW of microhydro, 432 kW of PV, and 1,386 kWh of batteries. Considering technology and economy, the best design for the research area consists of a total net present cost (NPC) of $6.42 million and a cost of energy (COE) of $0.395. It then introduces the social, technical, economic, environment, and policy (STEEP) model to thoroughly investigate the failure sources from both technical and economic viewpoints. The model outlines the important dimensions and measures required to address the issue of microgrid failure in distant communities.