This paper presents a power production system for the isolated insular power system of the islands Karpathos and Kasos. Karpathos and Kasos are two small islands, located in the South-East Aegean Sea (Dodecanese complex) that are not connected to the main power distribution network. Energy production is based exclusively on an autonomous thermal power plant and a small wind park, installed on the island of Karpathos. The maximum annual power demand has been estimated to exceed 12 MW by 2014. The mean specific annual energy production cost from the existing system has been calculated at 0.249 epsilon/kW h in 2008. The proposed system aims at the maximisation of wind energy penetration and the minimisation of imported fossil fuel use for the production of electricity. The proposed system consists of a wind park and a pumped storage system (PSS). The introduced power system aims to guarantee power production for certain hours per day. A thorough sitting of the system is accomplished. Three different sites for the PSS installation are examined before the optimum is selected. The available wind potential of the islands was evaluated using a wind mast installed within the frame of the examined project's feasibility study. The annual mean wind velocity at the wind park's installation site was measured to be higher than 11.5 m/s. The introduced system's set-up, and operation & maintenance cost parameters have been estimated. The dimensioning of the system aims mainly at optimising the project's economic indexes, following the existing legislative framework. The annual guaranteed energy production has also been maximised. An economic sensitivity analysis is performed. It is estimated that the proposed project can exhibit attractive economic indexes, regardless of the availability of a subsidy, on the condition that the selling price of energy should be configured at 0.3552 epsilon/kW h and the selling price of guaranteed power should be 127 epsilon/kW year. Under the above mentioned prerequisites, the project payback period is estimated at 5-6 years. The present paper proves the economic feasibility of small scale wind powered pumped storage systems, not taking into account the undoubted environmental benefits. (C) 2011 Elsevier Ltd. All rights reserved.