The Vanuatu government and the electricty utility company, Unelco, have signed an agreement to extend power connections on Tanna.
The new link will mean Tanna's White Grass International Airport is connected to the grid for the first time, while Tafea Junior Secondary School and villages in the vicinity will also have access.
The move is expected to develop the island's tourism and agriculture sectors.
Under last week's agreement, the government and Unelco will spend over 100 million vatu, or just over one million US dollars, on the development.
The airport hasn't been able to take night flights since it opened nearly 20 years because of a lack of lighting.
It also cannot receive overseas flights because it doesn't meet international aviation requirements.