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Understanding geothermal

Iceland produces substantial share of its electricity by harnessing geothermal resources. Geothermal plants now account for approximately one-quarter of all electricity generated and consumed in Iceland.

Several European countries are also looking towards geothermal heat as a source for electricity production. This for example applies both to Germany and Britain. However, these countries do not share Iceland’s  geophysical conditions and low-cost geothermal electricity is not an option unless you have access to very high temperatures, .

In Iceland, geothermal electricity generation is only considered feasible in areas where geothermal heat is at least 200°C  at a depth that is less than 1,000 m. This applies to many areas within the orange zone on the map above. Outside of this zone the heat is lower and more similar to what can be found in several areas in Europe.

Countries like Germany and Britain are building geothermal power plants in low-heat areas that would not be consider competitive in Iceland. However, it is understandable that European countries want to harness even their low geothermal heat for electricity generation. Wind energy is also an expensive option and so is solar energy (whether PV or CSP). There simply are very limited low-cost options available in European renewable generation.

Interestingly, it may be an excellent option for European countries to harness their low geothermal heat for central heating rather than generating electricity. This is an area of expertise where Iceland has great strength. Iceland has a long tradition harnessing low geothermal heat for central district heating, which explains why geothermal is such a large share of the primary energy use in Iceland (as can be seen on the chart above).

Recently, Icelandic engineering firm Mannvit exported this know-how to Hungary. There, the company provided engineering, procurement, and construction management of a geothermal district heating plant in the town of Szentlőrinc in the southwestern part of the Hungary.

The plant provides heating and hot water for some 900  homes in Szentlőrinc, and has excess capacity for further expansion. This new geothermal plant replaces the town’s natural-gas powered district heating system with environmentally-friendly and sustainable geothermal energy.

This type of geothermal harnessing is an option that could be interesting for many communities in numerous countries in Europe. In addition to Hungary, this for example applies to Germany, France, Slovenia and several other countries.

In a nutshell, geothermal is a resource Europeans should consider very seriously for district heating. This especially applies to local communities, taking an initiative not only towards more renewable energy but at the same time greatly  improving peoples living conditions. Instead of focusing too much on wind and solar and renewable electricity generation, governments need to understand and realize the multiple potentials of geothermal.

The United Kingdom and Icelandic electricity

The British Minister for Energy and Climate Change, Mr. Charles Hendry, was recently in Reykjavik discussing energy issues with Icelandic authorities and people in the industry. Mr. Hendry also gave a speech at an energy-seminar at the headquarters of the Icelandic Arion bank.

One of the main issues discussed were the possibility of connecting Iceland and the United Kingdom (UK) with an electric cable. The cable would transfer green electricity from Iceland’s natural renwable sources to the UK. Such a cable would also offer Iceland access to competitively priced electricity genereted in the UK during night (when demand in the UK is low). Thus, this could be a win-win project.

It is no surprise that the British Government is looking for acess to new sorces of green electricity. The share of renewable energy in the UK is very low. The total annual production of renewable energy in the UK is 54 TWh, which only accounts to approximately 3.5% of the country’s energy consumption.

The UK is determined to increase the share of renewable energy substantially. This is not only a governmental position but also a binding obligation according to the common energy policy of the European Union. Thus, the UK Department of Energy and Climate Change now has published the goal of having 15% of the UK’s energy consumption delivered from renewable sources by 2020.

Let’s look at what this means in numbers. The cost is very uncertain but definitely very high. It is of course hard to foresee exactly how much energy the UK will consume by 2020. According to the Department of Energy and Climate Change it is expected that the UK’s total annual energy consumption in 2020 will be 1,557 TWh. And 15% of 1,557 TWh is 234 TWh.

This means that the UK has to increase its renewable energy consumption from the present 54 TWh to 234 TWh no later than 2020. This is an increase of 180 TWh! 180 TWh of new green energy that needs to beavailable within less than a decade from now. In comparison the whole nuclear industry in the UK produced 69 TWh last year (2011.)

To achieve this goal of adding 180 TWh of renewable energy by 2020, green energy consumption in the UK will need to increase by 22.5 TWh each year over a period of 8 years. Obviously this renewable energy target calls for major investment in all kinds of green energy projects, including for example biomass, geothermal, hydro, solar and wind. Large portion of the new green energy will come from new renewable electricity generation (renewable heat and renewable fuels will have to increase substantially). Renewable electricity will need to maintain a growth rate of approximately 15% per annum from the 2010 baseline.

In addition to more renewable generation at home the UK is also focusing on major imports of electricity from renewable sources in neighbouring countries – like Norway and Iceland. This is why the British Minister for Energy and Climate Change is very positive towards an electric cable between UK and Iceland.

In fact Iceland has been considering such a connection between Iceland and Europe for years and even decades. However, it is probably not until now that such a high voltage direct current cable (HVDC) is becoming both tecnically possible and financially feasable.

And keep in mind that the British Government is already considering even more ambitious renewable energy targets for 2030 and beyond. Recent independent advice from the British Committee on Climate Change (CCC) has concluded that there is scope for the penetration of renewable energy to reach 30-45% of all energy consumed in the UK by 2030!

At the same time Iceland is in the somewhat unique position to have access to several excellent unharnessed renewable energy opportunities. In the coming weeks we will be presenting more information about the possible Iceland-UK interconnector  and explain Iceland’s potentials for generating more renewable electricity and gaining from Europe’s high electricity prices.

More information about UK’s energy policy and future scenarios:
–  UK Renewable Energy Roadmap
–  UK’s Renewable Energy Review
The charts above are from these two reports.

Hydro and geothermal country

Electricity production in Iceland is 100% from renewable sources (hydro and geothermal).

And more than 85% of total primary energy supply in Iceland is derived from domestically produced renewable energy sources. Of that total, 20% comes from hydropower- and 65% from geothermal sources. This is the world’s highest share of renewable energy in any national total energy budget.

Hydropower is the main source of the electricity production in Iceland, accounting for approximately three-quarters of all electricity generated and consumed in the country. The total annual production now is around 17,000 GWh, where almost 12,600 GWh is generated by hydropower stations.

The remaining quarter is generated in geothermal power stations. Actually, geothermal heat is the main energy source in Iceland. This great natural resource accounts for about 90% of space heating, thanks to the country’s geophysical conditions and extensive district heating system. As mentioned above, geothermal energy makes up around 65% of all primary energy use in Iceland.

Geothermal- and hydropower utilization in Iceland has increased fast in the last few years. However, so far only half of the best options have been utilized. Construction is under way for both new geothermal and hydropower projects. In addition, Iceland has interesting potentials for harnessing the wind as a power source.

Icelandic transportation is still mainly powered by fossil fuels. The government and private businesses are working towards changing this. Green solutions in the transport sector include electric cars powered by electricity from renewable sources and green fuels like bio-methane and methanol.


  • Total hydro generating capacity:  1,879 MW
  • Total annual hydroelectric production:  12,592 GWh
  • Share of hydroelectricity in total generation:  73.81%
Numbers from 2010, published by the Icelandic National Energy Authority in December 2011.


  • Total geothermal generating capacity:  575 MW *
  • Total annual geothermal electricity production:  4,466 GWh *
  • Share of geothermal in all electricity production:  26,18% *
  • Geothermal heat production (electricity production not included): 22,020 GWh **

 *  Numbers from 2010, published by the Icelandic National Energy Authority in December 2011.
** Numbers from 2006, published by the Icelandic National Energy Authority in December 2007. 

The charts above are from the website of Iceland’s National Energy Authority.

World’s largest electricity producer per capita

Iceland is the world’s largest electricity producer per capita. Norway comes in second place, by generating approximately half the electricity per capita of that of Iceland.

Other countries on the top-ten list of the world’s largest electricity producers per capita are Canada, Qatar, Kuwait, Finland, Sweden, United States of America (USA), United Arab Emirates (UAE) and Bahrain.

Most of the countries on the top-ten list of the world’s highest electricity producing countries per capita generate most or all their electricity from fossil fuels, especially gas and coal. However, both Iceland and Norway produce close to 100% of their electricity from renewable sources (both countries draw from hydroelectric power, but Iceland has a unique energy source in its geothermal power). Thus, Iceland and Norway are not only the largest producers of electricity (per capita) in the world, but also by far the world’s largest green electricity producers (per capita).

Canada, Finland and Sweden all have extensive hydropower sources and utilize them for electricity generation. Thus, they might be described as semi renewable electric producers (thus marked with light blue color on the graph, whereas Iceland and Norway are marked with dark blue). It is also noteworthy that Canada generates approximately


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