Hybrid energy system that combines diffuser-augmented wind turbines with photovoltaic panels and batteries are proposed in this research. ANSYS fluent (R) is used to simulate diffuser performance and ratified experimentally. HOMER (R) is used to perform a techno-economic analysis of the proposed hybrid energy system in terms of the levelized cost of electricity and the net present cost. Units of 1 kW wind turbines, 1 kW solar PV units, and 1 kWh Li-ion battery units are being used in the simulation. Input parameters like solar radiation, wind speed, and electricity tariff are considered for a typical location in Palakkad, India (10.7976 degrees N, 76.7430 degrees E). The proposed hybrid system with off-grid and on-grid mode are analyzed, and the results are presented. For 20 years project life, the proposed optimal on-grid hybrid energy system based on diffuser-augmented wind turbines has a levelized cost of electricity of $0.0044/kWh and a net present cost of $22,857. The corresponding values for the optimal on-grid hybrid energy system based on wind turbines are $0.0096/kWh and $41,143, respectively. Sensitivity analysis is performed on wind speed, solar radiation, and export tariff. According to this study, the usage of diffuser augmented wind turbine benefits low-speed wind regimes.