The Cyclades, a group of over thirty dispersed islands in the middle of the Aegean Sea can become a case study for energy-driven regional development. High cost, low reliability and scarcity of energy have significantly contributed to the underdevelopment of the region. There is a lack of local conventional energy sources, but the potential of renewable energy sources, namely geothermal, wind and solar is many times greater than the region's energy needs.The Energy Policy Unit has constructed an Energy Plan for Cyclades up to the year 2000 concerning the development of local economic resources in connection with programmes promoting the exploitation of local energy potential. New energy investments, mainly in the renewables and energy saving options were examined in detail. For this reason, consistent alternative scenarios of energy supply, energy demand and economic growth were developed and assessed through an integrated modelling system. In this paper, the emphasis will be placed on the energy supply model.