An effective grid integrated nanogrid model can be able to enhance the use of distributed energy resources. In the presented nano-grid model the idea includes photovoltaic (PV) and micro hydro power (MHP) systems with grid interconnected as distributed energy resources for power plants. The modelling results are examined using HOMER and MATLAB software. With three different options—50 kW, 100 kW, and 150 kW for MHP capacity—varying with the dynamic loads and water supplies, the HOMER imitate a nano-grid model. The nano-grid model with MHP design demonstrated lower energy costs as the grid reached peak load (150 KW), responsible CO2 emission depletion, and the highest percentage of renewable energy. According to the simulation results, the model nano-grid with the largest MHP capacity (150 kW) generated the least amount of energy at the lowest energy prices, the greatest reduction in carbon emissions is observed, and the best possible use of the electric output from renewable energy power plants.