The White Island Goes Green: How Graciosa Became a Global Benchmark for Hybrid Renewable Power

A Portuguese island that once relied almost exclusively on expensive diesel fuel shipments to keep the lights on now runs entirely on wind and solar power for nearly half the year. Graciosa didn’t just change its energy mix, it rewrote the playbook for what’s possible, earning Graciosa Hybrid Renewable Power Plant POWER’s 2025 Distributed Energy Award.

In the middle of the North Atlantic Ocean, roughly 1,000 miles from mainland Portugal, sits Graciosa—a volcanic island barely 24 square miles in size that locals call the “White Island” for its distinctive pale volcanic landscapes. Home to about 4,300 residents scattered across fishing villages and farming communities, Graciosa represents one of countless remote islands worldwide that face a fundamental challenge: how to power modern life when surrounded by nothing but ocean.

For decades, the answer was diesel fuel shipped in by tanker, an expensive and precarious lifeline that made electricity costs high and left the island vulnerable to supply disruptions. Located 31 miles northwest of its nearest neighbor, Terceira Island, Graciosa existed in the energy paradigm that has defined isolated communities for decades—near total dependence on imported fossil fuels, with all the economic and environmental costs that entails. The island’s geographic beauty, dominated by a central volcanic caldera (see opening image) and surrounded by sandy beaches, belied a harsh economic reality—energy security was always just one delayed fuel shipment away from crisis.

Yet, this same isolation that made Graciosa energy-vulnerable also blessed it with something invaluable—consistent Atlantic winds. What the island’s residents found was their remote location, long seen as a disadvantage, has become the foundation for an energy revolution that would transform not just their own lives, but serve as a blueprint for isolated communities around the world.

Hybrid Power Plant a Game-Changer

The Graciosa Hybrid Renewable Power Plant enables 1 MW of solar, 4.5 MW of wind power, and a 6-MW/3.2-MWh energy storage system to be supplied to the local grid. The hybrid renewable power plant is managed by Wärtsilä Energy Storage’s GEMS Digital Energy Platform. GEMS enables the island to achieve an integrated power system that combines renewables, engines, and energy storage to deliver economic, reliability, and environmental benefits. The GEMS platform uses artificial intelligence and data to control and balance multiple energy assets, automatically optimizing energy generation based on load patterns and weather forecasts, increasing the use of renewable energy, and decreasing the cost of diesel power generation while improving the reliability of the island’s energy grid.

“The system has significantly reduced reliance on costly diesel fuel, eliminating the need for an estimated 17,000 liters of diesel per month,” Luke Witmer, director of Data Science with Wärtsilä Energy Storage, told POWER. “This has translated into lower operational costs for Graciolica Lda [owner and operator of the hybrid power plant] and the local utility, EDA, which ultimately benefits ratepayers. The island now has a more resilient, cost-effective system that reduces long-term exposure to fossil fuel price volatility and power outages,” he said.

Weather forecasting is critical. GEMS integrates third-party forecast data and pairs it with proprietary algorithms to generate highly accurate predictions. Forecast accuracy directly impacts decisions such as battery charge timing or when to pre-emptively start engines. “Even small deviations in expected wind speeds can affect how much reserve margin is held,” Witmer explained. “As such, highly accurate weather forecasts are key to maximizing renewable penetration.”

GEMS leverages advanced forecasting and artificial intelligence to continuously analyze conditions such as grid demand, weather patterns, asset status, and market prices to make informed real-time decisions. On a typical day, GEMS starts by ingesting load and weather forecasts, then schedules and adjusts asset dispatch to optimize renewable energy usage. Throughout the day, it monitors fluctuations in solar irradiance or wind speeds and makes rapid adjustments to maintain grid stability, such as charging or discharging the battery, curtailing renewables when needed, or bringing engines online.

The primary technical challenge for project developers was achieving seamless real-time coordination between intermittent renewable sources and thermal generation within the constraints of an islanded grid. “Unlike mainland systems with larger balancing resources, Graciosa’s system requires extremely precise control of every asset—solar, wind, diesel, and battery storage—to ensure both reliability and efficiency,” said Witmer. “Integrating these components under Wärtsilä’s GEMS Digital Energy Platform allows for both individual asset control as well as system balancing to maximize renewable energy penetration.”

A Model for Others to Emulate

The Graciosa Hybrid Renewable Power Plant (Figure 1) is highly scalable for other islands and off-grid environments. The same architecture—renewables, storage, thermal backup, and intelligent controls—can be expanded for larger regions or adapted to other geographies. “GEMS is asset-agnostic and can manage everything from microgrids to multi-GWh utility-scale portfolios, making it applicable for small islands, remote mining towns, or mainland grids,” asserted Witmer.

1. The Graciosa Hybrid Renewable Power Plant incorporates solar, wind, and energy storage resources. Courtesy: Graciolica Lda

The results have been compelling. “Graciosa is a global benchmark. It is among the first to achieve over 60% annual renewable penetration without hydro or geothermal sources. It also serves as a rare example of sustained operation with 100% renewables for days at a time,” said Witmer. “In 2024, Graciolica achieved an annual average renewable penetration of 61% and a total of 139 days operating with only renewables.”

The potential is real and accelerating. With declining costs, technology innovations, and supportive policies, Witmer believes islands can feasibly eliminate fossil fuels entirely within the next decade.

Meanwhile, additional machine learning enhancements for renewable power forecasts and load forecasts, as well as a probabilistic decision-making solution, are currently in development for Wärtsilä Energy Storage’s GEMS island solution. These enhancements, which have already been implemented in grid-connected hybrid projects, aim to improve accuracy and efficiency in energy management on islands even further.

Improved Designs Are Available Today

The core foundations of the Graciosa project—specifically the hybrid integration of renewables, energy storage, engines, and real-time optimization through the GEMS Digital Energy Platform (Figure 2)—remain highly applicable today, according to Witmer. However, since the commissioning of this project, Wärtsilä Energy Storage has introduced a new generation of energy storage hardware that offers significant advantages depending on the specific requirements of a project.

2. GEMS controls and optimization software gives users deep visibility across their systems, unlocking more accurate real-time decision-making. Courtesy: Wärtsilä

For example, Quantum High Energy utilizes higher-capacity battery cells to deliver approximately 9% more energy density than previous versions. “This is particularly useful for island projects where land is limited and maximizing storage within a compact footprint is crucial,” Witmer explained.

Wärtsilä Energy Storage also introduced Quantum2, a containerized, plug-and-play solution designed for faster installation. Its robust, weather- and seismic-resilient construction makes it ideal for remote or logistically complex locations. Most recently, Wärtsilä Energy Storage launched Quantum3, which incorporates string inverters and an in-house battery management system for improved control, lower noise, enhanced cybersecurity, and a reduced environmental footprint.

“This project marked a significant milestone in our strategy for remote and islanded energy systems. As the leading pilot project, it has become a cornerstone, demonstrating the future of integrated energy solutions for these unique power scenarios,” Witmer reported.

“Specifically, it was the first project to combine grid-forming battery inverters, co-optimized hybrid asset control, load forecasting, renewable forecasting, and engine control into a single, harmonized control platform,” he said. “This innovative integration has enabled more reliable and efficient energy management for remote and islanded systems. This foundational work paved the way for some of Wärtsilä’s most advanced projects, which are now actively contributing to decarbonization efforts across the globe.”

—Aaron Larson is POWER’s executive editor.