The paper investigates the alignment strategy of solar energy growth in the Andaman and Nicobar Islands in line with the net-zero emission trajectory of India. The aim is to reduce carbon dependency, optimize renewable energy use, and foster sustainable energy development in the region. Currently, the islands rely mainly on diesel-fuelled power plants, generating about 72.5% of the energy through fossil sources, leading to high carbon emission, energy insecurity, and economic instability. The analysis utilizes secondary data obtained from 2010 to 2024 from MNRE, CEA, CPCB, NITI Aayog, IMD, and the World Bank, employing fixed effects (FE), instrumental variable fixed effects (IV-FE), spatial Durbin model (SDM), and difference-in-difference (DID) techniques. The findings indicate a significant increase in solar installation capacity from 20 MW to 128 MW in 2024, accompanied by decreased CO₂ emission from 2.5 to 1.72 t/capita. According to the FE regression model, solar capacity exhibits a high negative coefficient (β= −0.0129, p = 0.002), while according to the IV-FE regression model, there is a higher effect from this variable on the outcome (β= −0.0176, p = 0.005). Additionally, the results of the policy simulation demonstrate that a 30% rise in solar capacity helps lower CO₂ emission levels by 19.6% and improve renewable energy share by 13.1%. In conclusion, decentralized solar power, battery integration, agrovoltaic technology, and policy measures are important for the successful transition of islands towards sustainable energy use.