An enormous number of domestic and international tourists visit Saint Martin’s Island in Bangladesh annually. Unfortunately, the lack of proper planning as well as severe electricity shortages are hampering its development towards a smart city. This study proposes a smart city model for the remote area with a grid-independent microgrid to meet the rising load demand. It demonstrates that implementation of the Internet of things can effectively utilize the resources of Saint Martin following the smart city criteria. The distributed energy resources have been optimized to identify the best microgrid configuration that complies with Sustainable Development Goal 7. Finally, nonlinear simulations are carried out to compare the stability of the proposed systems. The study outlines the benefits of employing eco wave power and second-life batteries, as well as the advantages of using a supercapacitor as a speedy responder to disturbances. The research ultimately gives the multidisciplinary knowledge to policymakers that they require to transform a small island like Saint Martin into a tourist-intensive smart city.