Pumped hydro storage (PHS) systems which are located at isolated regions and are able to exploit the rejected wind energy amounts produced by local wind farms, seem to gain interest worldwide and to become essential in regard to higher shares of renewable-generated electricity. Despite the high wind potential encountered in many Greek island regions, the wind energy contribution to the electrification of these areas is significantly restricted due to imposed electrical grid limitations. In this context, the current work examines the economic viability of a wind-based PHS system (wind-hydro solution) which provides the local electrical grid of an Aegean Sea island, Lesbos, with guaranteed energy amounts during the peak load demand periods. Based on the maximization of the project's net present value, the optimum system configuration is proposed while many other feasible solutions are revealed. According to the results obtained the implementation of this project demonstrates excellent technical and economic performance, while at the same time renewable energy sources (RES) contribution is doubled reaching almost 20% of the Lesbos island electrical energy consumption. (C) 2010 Elsevier Ltd. All rights reserved.