Current power systems create environmental impacts due to utilization of fossil fuels, especially coal, as carbon dioxide is emitted into the atmosphere. In contrast to fossil fuels, renewable energy offers alternative sources of energy which are in general pollution free, technologically effective and environmentally sustainable. There is an increased interest in renewable energy, particularly solar and wind energy, which provides electricity without giving rise to carbon dioxide emissions. This paper presents a feasibility study undertaken to investigate the availability and usefulness of renewable energy sources in Central Queensland of Australia. The half hourly mean global solar irradiance and three hourly mean wind speed has been collected from Rockhampton Aero Weather Station, Queensland, Australia to further investigate the impact of renewable energy sources in existing and future smart power system. HOMER (Hybrid Optimization Model for Electric Renewable), computer model developed by NREL (National Renewable Energy Laboratory) has been used to performs comparative analysis of solar and wind energy with diesel and hybrid systems. Initially total net present cost (NPC) and the renewable fraction (RF) have been measured as performances metrics to compare the performances of different systems. Finally for better optimization, the model has been refined with sensitivity analysis which explores performance variations due to wind speed, solar irradiation and diesel fuel prices. (RESULT) From the simulation, it is shown that there are a number of factors that impact the performances of renewable energy sources to the power systems.