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This paper introduces an optimal sizing algorithm for a hybrid renewable energy system using smart grid load management application based on the available generation. This algorithm aims to maximize the system energy production and meet the load demand with minimum cost and highest reliability. This system is formed by photovoltaic array, wind turbines, storage batteries, and diesel generator as a backup source of energy. Demand profile shaping as one of the smart grid applications is introduced in this paper using load shifting-based load priority. Particle swarm optimization is used in this algorithm to determine the optimum size of the system components. The results obtained from this algorithm are compared with those from the iterative optimization technique to assess the adequacy of the proposed algorithm. The study in this paper is performed in some of the remote areas in Saudi Arabia and can be expanded to any similar regions around the world. Numerous valuable results are extracted from this study that could help researchers and decision makers. [ABSTRACT FROM AUTHOR]