Finance is being sought to provide a solar energy farm for Stewart Island Rakiura residents.
Southland District Council (SDC) said it was set to submit a proposal for the plan to the Regional Infrastructure Fund.
The council had already secured $300,000 of government funding and hired PTM consultants to advise it of the next best steps.
A draft document was given to a steering group just before Christmas.
About 440 people live on Stewart Island Rakiura, where electricity is currently provided from a diesel-based power station, the council said.
Instead, PTM recommended a 2 megawatt solar farm and a 4MWh battery that would provide about 75 percent diesel displacement, as being best value.
Mayor Rob Scott said the council met with about 80 islanders who supported the planned approach. They had shown a strong level of engagement, he said.
"It has been the steering group's priority to get something done about the cost of electricity on the island for the past 18 months, as the impact on islanders is high, and this has been a talking point for several years.
"We have agreed that a staged approach will be the best way to achieve immediate benefits and to go with the recommended option, which will not only reduce reliance on diesel to a large extent but also be a more future proof solution.
"The first stage is to create a solar energy farm with batteries, on appropriate land. This will supplement the diesel generators, not replace them, and so improvements are planned for the whole network and to ensure the generators are operating in the most efficient way."
The second stage would involve another source of renewable energy, possibly wind.
SDC said it wanted to keep momentum going, so would continue to investigate possibilities for the second stage, as stage one was underway.
The council said its goal was to have renewable energy generation on the island to provide reliable and relatively affordable electricity for residents, and to enhance economic development in the form of tourism and aquaculture.
"Council will be submitting a proposal to the Regional Infrastructure Fund for the funding of this project very soon, as it will be impossible for 400 residents to cover the capital costs. This is a one-off investment that will give new life to the island and secure a strong future for the islanders," Scott said.
"Council is excited about the plan and the agreed option, and we are looking forward to working with the government to support the community on something the islanders have wanted for a long time."