Photovoltaics and wind generation are currently perceived to be a viable option for reducing the environmental impact of energy sources while simultaneously showing significant potential to reduce dependence on conventional fuels and to increase local energy security. However, the stochastic and weather-driven nature of solar and wind energy, as well as varying energy demand, makes energy systems which are based on renewables unsuitable from the perspective of power supply reliability. As a solution, they can be integrated into the power system by, for instance, energy storage in the form of pumped-storage hydroelectricity or rapidly up- and down-ramping gas power plants. This paper introduces a mathematical model for simulating and optimising the operation of a large scale solar-wind hybrid coupled with pumped-storage on a district level considering a simplified approach to incorporate grid-related cost. The model assumes spatial and temporal variability of energy generation from photovoltaics and wind turbines as well as spatial distribution of energy demand. For the purpose of including grid-related cost, we introduce a local consumption index (LCI) as a measure for decentral generation and optimise the power system with respect to different CO2 prices. We show that the introduction of the LCI facilitates the increase of renewables shares and that PV and wind are already cost-competitive at low CO2 prices. (C) 2018 Elsevier Ltd. All rights reserved.