This study proposed mathematical modeling and optimal sizing methodology for the wind turbines, the solar photovoltaic (PV) panels, and the Li-ion battery units that composed an off-grid system. The methodology considered the capacity fading and the temperature variation of the Li-ion battery units. The wind turbines and the solar PV panels were modeled as a function of wind speed, irradiation, and ambient temperature. The Li-ion battery units were simulated by the thermal-model combined equivalent circuit model as a function of the state of charge and the cell temperature. The voltage values were estimated within the maximum error of 3% compared to the experimental results for different discharge rates and temperature conditions. A case study for Jeju island in South Korea showed that the capacity factors of onshore wind energy, offshore wind energy, and solar PV energy were 26.5 %, 27.8 %, and 9.1 %, respectively. The optimal capacity of the onshore wind turbines, the offshore wind turbines, the solar PV panels, and the Li-ion battery units were evaluated as 16 MW, 1,532 MW, 6,076 MW, and 14,651 MWh, respectively. The corresponding life cycle cost (LCC) and levelized cost of electricity (LCOE) were also evaluated as 84.3 BUSD and 0.42 USD/kWh. With the capacity fading, the optimal capacity of the onshore wind turbines, the offshore wind turbines, the solar PV panels, and the Li-ion battery units varied from 16 MW, 1,532 MW, 6,076 MW, and 14,651 MWh to 2 MW, 1,947 MW, 5,072 MW, and 16,927 MWh, respectively. The corresponding LCC and LCOE were nearly invariant. The maximum temperature of the battery units was estimated to be $32.6 ~ 153.9 ^\circ C$ for different cooling conditions. From the results of temperature variation, it was concluded that the convection coefficient should be larger than 0.01 W/$m^2$×K for negligible degradation of performance, and 0.001 W/$m^2$×K to prevent thermal runaway. Finally, the sensitivity analysis was conducted for different renewables penetration, the portion of electric vehicles (EVs), and the reduction of demand in summer season. The results showed that the increasing rate of LCC was directly proportional to the renewables penetration and six times increasing of LCC compared to current renewables penetration in Jeju island. The increase in LCC by 29 % was evaluated based on all vehicles on Jeju island being changed to EVs. The capacity of the Li-ion battery units were decreased by 26 % when the demand was removed in summer.