This paper demonstrates the application of hybrid energy system (HES) that comprises of photovoltaic (PV) array, battery storage system (BSS) and stand-by diesel generator (DGen) to mitigate the problem of load shedding. The main work involves techno-economic modelling to optimize the size of HES such that the levelized cost of electricity (LCOE) is minimized. The particle swarm optimization (PSO) algorithm is used to determine the optimum size of the components (PV, BSS). Simulations are performed in MATLAB using real dataset of irradiance, temperature and load shedding schedule of the small residential community situated in the city of Quetta, Pakistan. The LCOE for the HES system under study is 8.32 cents/kWh-which is lower than the conventional load shedding solution, namely the uninterruptable power supply (UPS) (13.06 cents/kWh) and diesel and generator system (29.19 cents/kWh). In fact, the LCOE of the HRES is lower than the grid electricity price of Pakistan (9.3 cents/kWh). Besides that, the HES alleviates the grid burden by 47.9% and 13.1% compared to the solution using the UPS and generator, respectively. The outcomes of the study suggests that HES is able to improve reliability and availability of electric power for regions that is affected by the load shedding issue.