The growth of energy demand reduces the resources of fossil energy, increases energy prices, and causes possible interruptions in energy supply system and decreased security of energy supply in the future. Production of energy from renewable sources is the basis for future sustainable energy and a model for sustainable development of local communities on the islands, with which the management of local energy resources and energy planning become even more important. By utilization of local energy resources, the island of Krk can plan its sustainable development and become energy self-sufficient island. This master thesis is to explore sustainable energy on the island of Krk, which includes the integration of renewable energy into the existing energy system and effective management of energy flows on the island. This master thesis uses mathematical model H2RES in order to analyse the existing resources of renewable energy on the island of Krk and to calculate the potential for electricity production to meet their own energy needs. In addition to the production of energy from renewable sources, the research is focused on energy efficiency and measures to increase energy efficiency on the island. It shows in more detail the most effective measures that can reduce energy consumption and energy costs in the local community on the island. Energy efficiency as one of the major concerns in the construction sector today is being analysed through the issue of public lighting, the efficiency of heating and cooling, the reconstruction of existing facilities and thermal insulation, and the possibility of the introduction of electro mobility in the transport sector. Production of energy from renewable sources and implementation of concrete measures to increase energy efficiency can help the local community on the island to effectively manage energy, to increase energy security, and to achieve energy self-sufficiency. The thesis also shows the importance of involving local community in the creation of local energy policy without whose participation will be hardly possible to affect the necessary change in legislation which should allow unhindered development and launch processes of energy self-sufficiency on the islands in Croatia. Besides favourable financing models that show profitability of investments in renewable energy sources in the medium term, this research also presents the positive economic indicators that can attract investors to invest in these or similar projects. Moreover, there are existing examples of energy self -sufficient islands elsewhere in the world that testify about the sustainability of such projects and the profitability of such investments.