A method for islanding detection in an electrical power grid supplied by an electrical power source. The method includes measuring an output voltage (Vpcc) and a grid current (Ig) at an interconnection point of the power source with the power grid; estimating at least one grid parameter from the output voltage (Vpcc) and the grid current (Ig) based on optimizing a cost function, which minimizes a difference between the measured output voltage (Vpcc) and an estimated output voltage or a difference between the measured grid current (Ig) and an estimated grid current, which estimated output voltage or estimated output current is a function of the measured grid current (Ig) or the measured output voltage (Vpcc) and the least one estimated grid parameter; and detecting an islanding condition by detecting a jump and/or a deviation in the at least one estimated grid parameter.