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Abstract Islands' energy systems present a challenge in energy planning due to a limited amount of resources which could be used to make islands self-sufficient and sustainable. This paper presents a novel approach for defining energy system of a carbon neutral island which utilizes only intermittent renewable energy sources in combination with vehicle-to-grid concept as a demand response technology, where marine transportation has also been taken into account. Integration of power, heating, cooling and transport sectors has been modelled by using EnergyPLAN tool, i.e. its updated November 2017 version which is capable of simulating vehicle-to-grid operation in mentioned conditions. Power supply capacities have been selected not by using scenario analysis but by implementing an optimization procedure based on series of simulations in EnergyPLAN tool. In order to choose the most suitable power supply system configuration, two boundary conditions have been defined. Firstly, only solar and wind capacities must be utilized. Secondly, total electricity import and export must be balanced, i.e. the island has to be CO 2 neutral. In order to validate the approach, Croatian Island of Korčula has been used as the case study. 2011 has been selected as the base year for which final energy consumption has been calculated. The final simulation year was set to 2030 in which optimal capacities are installed. It has been shown that configuration with 40 MW of wind and 6 MW of installed solar capacities presents the least cost solution, while 22 MW of wind in combination with 30 MW of installed solar capacities provides the lowest amount of total electricity import and export. Analysis of the vehicle-to-grid share reduction has shown increase in total import and export in both cases, while transmission peak loads have not been influenced. Highlights • Optimization of supply capacities in order to achieve carbon neutrality. • Vehicle-to-grid with 100% share, including the ferry line. • Case study of Island of Korčula in Croatia. [ABSTRACT FROM AUTHOR]