Several studies have proposed different tools for analyzing the integration of variable renewable energy into power grids. This study applies an optimization tool to model the expansion of the electric power system in northeastern Brazil, enabling the most efficient dispatch of the variable output of the wind farms that will be built in the region over the next 20 years. The expected combined expansion of wind generation with conventional inflexible generation facilities, such as nuclear plants and run-of-the-river hydropower plants, poses risks of future mismatch between supply and demand in northeastern Brazil. Therefore, this article evaluates the possibility of using a fleet of plug-in hybrid electric vehicles (PHEVs) to regularize possible energy imbalances. Findings indicate that a dedicated fleet of 500 thousand PHEVs in 2015, and a further 1.5 million in 2030, could be recharged overnight to take advantage of the surplus power generated by wind farms. To avoid the initial costs of smart grids, this article suggests, as a first step, the use of a governmental PHEV fleet that allows fleet managers to control battery charging times. Finally, the study demonstrates the advantages of optimizing simultaneously the power and transport sectors to test the strategy suggested here. (C) 2011 Elsevier Ltd. All rights reserved.