Proposed solutions to overcome the intermittency and variability of wind and solar generation are manifold. However, it is unlikely that a single technology and/or method will enable the envisioned high penetration of these resources. In this paper, a hybrid approach is presented which coordinates and optimizes the operation of wind generation, hydro power plants, large and small-scale storage devices, conventional power plants and demand side management. The approach is based on model predictive control (MPC) which takes advantage of wind and load forecasts and uses fluid dynamics to predict and optimally schedule hydro power plants.