The increasing penetration of large shares of renewable energy resources allows reducing system operation costs of island power systems. However, operation of island power systems is also challenged by this increasing penetration. In particular, non-synchronous generation, coupled to the grid by a stage of power electronic converters, might further stress stability issues of island power systems. Frequency stability poses actually a major problem in this regard. Further, variability of renewable energy sources might affect current reserve requirements. The use of energy storage systems, EV, demand response or island interconnection could mitigate some of these issues. The presentation will focus on both economic and technical operation of island power systems and particularly, of the Canary Islands. We will present the principal results of various research projects on the impact of wind and PV power generation, energy storage, EV and demand response as well as island interconnection on system operation costs, reserve, and frequency and transient stability.