Many villagers in East Malaysia are still depending on diesel generator as their electric source. Due to the high transportation fees for the diesel, the cost to operate the diesel generator are more expensive compared to the market price in urban areas.Hybrid renewable energy systems are being implemented in the rural areas to replace the diesel generators. The hybrid system will not only reduce the cost of power, but the carbon dioxide emission as well. In this paper, an AC bus off-grid Pv/Wind hybrid system is designed using PSCAD to be used for rural electrification. This project designed a solar-windbattery hybrid renewable energy system with a capacity of 13kW and 3kW for solar and wind respectively. The design includes an improved control strategy that does not require any dump load. The off grid hybrid system is designed and simulated for a typical load of 20 houses in Sandakan. Sandakan was selected as it has the required wind speed for wind energy. The simulation results clearly indicate that the proposed controller is able to regulate the voltage and frequency within limits for various environmental and load conditions.