The tourism industry performance in Albania remains far below its potential. Albanian coast length of 427km remains undeveloped and only 10% of it has been used. Unlocking the touristic potential of Albania is the purpose of the research theses, while environmental sustainability is maintained. . The uninhabited Sazan Island is one of the greatest natural resource of the Albanian coastline. The government has proposed and prepared a technical document for the management of Sazan Island. The knowledge gap of the governmental Sazan management plan is limited to a management scenario and does not explore the development potential of the Island. The thesis aims to investigate the potential of the uninhabited Sazan Island to be developed and urbanised as an eco-friendly free economic zone with smart grid for sustainable tourism. As such, the main objective is to conduct a feasibility analysis by estimating renewable energy potentials in Sazan Island The renewable energy potentials for Sazan Island from solar power, wind power and marine currents were estimated based on geographic and climatic conditions. The self-sufficiency of Sazan Island could be achieved only through efficient management of energy and integration of renewable energies into smart grid. The results offer a fresh perspective on accelerating green economy, green jobs, and green communities on local, national and regional level. On this basis, it is recommended the urbanisation and development of Sazan Island as smart island for sustainable tourism. Further research could be undertaken to explore more in depth the feasibility study of Sazan Island.