Desalination powered by renewable energy sources (RES) is presented as an alternative option for the water supply augmentation in the semi-arid region of the island of Rhodes. The case study was chosen as the island relies mostly on the exploitation of groundwater resources and faces serious water shortage problems in an already stressed environment. Alternatives are discussed and compared in contrast to the construction of storage dams to meet urban water needs up to the year 2040. Results may indicate that through the use of financial incentives coupled with holistic water management approaches, desalination powered by RES could be an attractive and environmentally friendly option in an effort to solve problems related to water quantity and quality in semi-arid regions with adequate renewable energy potential.