The integration of renewable energy (RE) in energy systems can be approached in many ways depending on local possibilities. Evaluating this in the limited context of islands, this paper presents a multi-energy system transition to a 100% RE share in a two-folded technical analysis. The case study of Madeira Island using the EnergyPLAN modeling tool is used to show strengths and weaknesses of, on the one hand, electrifying all transport and heating demands on an island, while remaining demands are supplied with biomass, and, on the other hand, additional smart charging, vehicle-to-grid, thermal collectors and storages, as well as electrofuel production and storages. Technical results indicate the potentials and advantages of the second approach with 50% less biomass and no curtailment at 1–3% higher costs, compared to the first one with 7% of production curtailed. The technical analysis is supported by the institutional analysis that highlights the balancing needs through additional flexibility and interaction in the energy system. For maximum flexibility, of both demand and grid, and successful implementation of 100% RE, investment incentives and dynamic tariffs are recommended entailing more dynamic consumer involvement and strategic energy planning.