In a power system with high wind power penetration, reserve allocation is a major problem of system planning and operation due to the uncertainty and fast fluctuation of wind speeds. In order to achieve long term sustainable solution for electricity supply, the impacts of the installation of wind farms on system reliability have to be carefully studied. This paper describes the impact of installation of wind farms on the system reserve and reliability from a long term planning point of view. A multi-state wind farm model and a multi-state load model are combined using universal generating function (UGF) to simulate the fluctuation of wind speed, reliability of wind turbine generators and uncertainty of load. A reliability-based hydro/thermal reserve allocation method is proposed to determine the conventional reserve required for power systems with high wind power penetration. The IEEE-RBTS has been modified to illustrate the applications of the proposed method.