The water sector, whether for drinking water supply, water treatment plants, wastewater treatment, stormwater drainage, or plantation drainage, has significant electricity costs and carbon emissions associated with generating the energy needed for these operations. In addition, water utilities have high water losses and generally do not have their sources to generate electricity. According to ERSAR (the regulatory authority for water and waste management), only 43 out of 251 water utilities produced their energy in 2022. Self-generation of energy should be a prerequisite to achieving sustainability and carbon neutrality in the water sector, and there are several prerequisites for this in the sector. In this context, technological innovations in the water sector are also being used to achieve the goal of carbon neutrality. The use of smart water networks and hybrid renewable energy solutions is a methodology for assessing urban water resources, artificial intelligence methods, and smart technologies, improving system efficiency, and replacing pressure reducers with turbines, where possible. A case study of the island of Madeira is discussed. Madeira’s water network is one of the least efficient in Portugal and has the highest water losses. The reasons for this are the very different topography, the age of the water networks, and their length and low maintenance. Here, by determining the highest value (while maintaining the flow rates and the minimum pressure required by law) in the EPANET software, the possibility of installing a turbine to generate electricity instead of a pressure-reducing valve is evaluated. The turbine will use the overpressure to generate electricity. The aim is for the system to use this energy in these processes. These high-pressure points are also normally associated with water losses.