Since the first oil shock in 1973, many small islands have not assessed the strategic implications of dependence on oil imports, and have not opted to interfere in their own energy markets. This paper considers the notion of different levels of energy service delivery (by concentrating on local suitability), based on research relating to the Channel Island of Guernsey, and shows that significant energy savings are available. For this energy service delivery approach to be put into effect this paper suggests that a move away from the present laissez-faire supply-based stance will be necessary. Distributed cogeneration is considered in a case situation (using techniques that no small island currently employs) and shows a strategic energy conservation solutions to questions no one has yet seriously asked. © 1997 John Wiley & Sons, Ltd.