As wind power penetrations increase in isolated power systems, more innovative and sophisticated approaches to system operation will need to be adopted due to the intermittency and unpredictability of wind power generation. Development of better wind-thermal coordination algorithms is necessary to determine the optimal proportion of wind generator capacity that can be integrated into the system for operating an isolated hybrid power system reliably and efficiently. In this paper, an iterative algorithm, which utilizes a direct search method (DSM) approach, is developed to coordinate the wind and thermal generation dispatch and to minimize the total production cost in the reserve constrained economic dispatch considering wind power generation. The effects of total wind power generation and system spinning reserve requirements are consistently reflected in the total production cost. Numerical experiments are included to understand the wind generator capacity in the production cost analysis and to provide valuable information for both operational and planning problems. (c) 2006 Elsevier Ltd. All rights reserved.