Providing water supply in off-grid islands is difficult due to remoteness and high logistics cost. Despite interest in providing energy sustainability in these areas, there is relatively lesser interest in coupling it with sustainable water access. One of the possible solutions is through the use of reverse osmosis (RO) technology for desalination since it has a low energy requirement and high throughput. In this work, the techno-economic viability of incorporating desalination units was elucidated as demand-side management in different dispatch algorithm, accounting water-energy nexus. Different water-energy system configurations were optimized and simulated using ISLA, an open-source microgrid optimizer. Results suggest the viability of installing desalination units with a minimum-level dispatch algorithm yielding the lowest levelized cost of water (LCOW) with only minimal increase in the levelized cost of electricity (LCOE).