This paper introduces a new energy planning methodology for more efficient promotion of renewable energy source (RES) technologies in the electricity sector. The proposed methodology has been developed under the European Programme ALTENER and the main outcome is a comprehensive computer simulation tool called INVERT. In this paper, a practical application of INVERT as well as a brief description will be presented through a detailed case study for the island of Crete. A number of different RES technologies, namely wind, small hydro, photovoltaic, biomass and solar thermal plants, have been simulated in sensitivity analyses based on new or additional RES promotion schemes. Simulation runs, considering existing and future electricity potential, have been carried out up to 2020. Transfer costs and CO2 emissions of hypothesis scenarios have been compared with a reference scenario and the results will be presented and analysed. (c) 2005 Elsevier Ltd. All rights reserved.