The electrification of Greek islands has always been a challenge due to various technical and financial constraints. The complexity of the issue is accentuated from the islands’ large number, their sparseness and the significant seasonal variability of electricity demand, due to them being popular tourist destinations. This issue was addressed in the main Ionian Islands through interconnections to the mainland Greek grid between 1960 and 1980. In April 2018 the first phase of the interconnection project of the Cyclades, an island group of the Aegean Sea, to the main grid was completed. Despite the ongoing interconnection projects, the majority of the Aegean Sea islands will continue to produce electricity in a business-as-usual manner. In the short- and medium-term it is not expected that interconnection to the main grid will be a universal solution for all islands. The scope of this master thesis is to present the legislative and regulatory framework for the operation of the market of Non-Interconnected Islands, the way in which energy companies operate and been compensated in this market, and the issues that have arisen in recent years due to the liberalization of the energy market. Finally, a brief reference is made to the very recent interconnection of Crete with the Peloponnese.