The large-scale integration of renewable energy sources (RES) into islanded microgrid systems, such as in Nusa Penida, poses fundamental challenges to the reliability of conventional protection systems, marked by a high rate of miscoordination leading to system blackouts. This research aims to design and validate an optimal adaptive protection scheme to address this issue by evaluating the existing system's performance, analyzing changes in fault current characteristics, and implementing a point-to-point coordinated protection (P2P-CP) concept via a setting group switching mechanism. This study employs a quantitative methodology based on computational simulation using ETAP 14.1 software. The 20 kV Nusa Penida electrical system was modeled and validated against real operational data to ensure accuracy. Short-circuit analysis were performed under various scenarios with and without PV plant operation during peak and low load conditions to design an adaptive solution utilizing the multi-setting group feature in digital Relays for two primary operating modes. The analysis revealed that PV penetration significantly reduces three-phase fault currents more than 10% but has a minimal impact (<1%) on single-phase-to-ground faults, which is the root cause of miscoordination in the existing scheme. The evaluation confirmed coordination failure on 3 of the 7 main feeders, with a Coordination Time Interval (CTI) of 0 seconds. The proposed adaptive protection scheme successfully restored full coordination, maintaining the CTI at a safe and stable level of approximately 0.3 seconds.