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Upcoming Power Projects in Iceland

The following list explains what power projects are being considered in Iceland, according to the Icelandic Master Plan for Nature Protection and Energy Utilization. The projects have been cost analyzed (levelized cost of energy; LCOE), as described in a recent report published by the Icelandic Energy Industry Association (Samorka).

The projects are classified into three different groups (not all the possibilities have been officially cost-analyzed):

Utilization category: The project is likely to be developed if/when there is power demand and interest by the energy sector.

Projects on hold: More information and/or data is needed to decide if the project will be classified as Utilization or Protection.

Protection category: The project is unlikely to be developed, due to environmental issues.

The current classification is being reconsidered by the government  However, it is the Icelandic Parliament (Alþingi) that takes final decision regarding how each project is categorized. This means that over time, project(s) may be moved from one category to another, based on a political decision by the Parliament. The following classification is up to date as of August 2016. Note that in Samorka’s report on the LCOE, the cheapest option, Norðlingaölduveita, is said to be on hold. In fact this option is currently in the protection category.

 Project name Current  Type MW Annual LCOE
  classification GWh USD/MWh
1 Norðlingaölduveita* Protection Hydro n/a 670 22.50
2 Búlandsvirkjun On hold Hydro 150 1,057 25.00
3 Jökulsárveita/Blönduveita On hold Hydro n/a 100 25.00
4 Urriðafossvirkjun On hold Hydro 140 1,037 25.00
5 Þeistareykir I** and II Utilisation Geothermal 270 2,214 28.90
6 Hrafnabjargavirkjun* On hold Hydro 89 585 30.50
7 Villinganesvirkjun On hold Hydro 33 215 30.50
8 Skrokkölduvirkjun On hold Hydro 45 345 30.50
9 Hólmsárvirkjun* Protection Hydro 72 470 30.50
10 Bjarnarflag Utilisation Geothermal 90 756 35.20
11 Meitillinn Utilisation Geothermal 45 369 35.20
12 Sandfell Utilisation Geothermal 100 820 35.20
13 Sveifluháls Utilisation Geothermal 100 820 35.20
14 Austurengjar On hold Geothermal 100 820 35.20
15 Gjástykki On hold Geothermal 50 420 35.20
16 Trölladyngja On hold Geothermal 100 820 35.20
17 Bitra Protection Geothermal 135 1,100 35.20
18 Brennisteinsfjöll Protection Geothermal 90 711 35.20
19 Hvammsvirkjun Utilisation Hydro 93 270 38.80
20 Búðartunguvirkjun On hold Hydro 27 230 38.80
21 Hagavatnsvirkjun On hold Hydro 20 120 38.80
22 Holtavirkjun On hold Hydro 57 450 38.80
23 Hraunavirkjun* On hold Hydro 126 731 38.80
24 Selfossvirkjun On hold Hydro 35 258 38.80
25 Stóra-Laxárvirkjun Unclassified Hydro 35 200 38.80
26 Tungnaárlón On hold Hydro n/a 70 38.80
27 Bláfellsvirkjun Protection Hydro 89 516 38.80
28 Djúpárvirkjun Protection Hydro 86 499 38.80
29 Markarfljótsvirkjun Protection Hydro 121 702 38.80
30 Gráuhnúkar Utilisation Geothermal 45 369 44.80
31 Eldvörp Utilisation Geothermal 50 410 44.80
32 Hverahlíð Utilisation Geothermal 90 738 44.80
33 Krafla II Utilisation Geothermal 150 1,260 44.80
34 Stóra-Sandvík Utilisation Geothermal 50 410 44.80
35 Botnafjöll On hold Geothermal 90 711 44.80
36 Fremrinámar On hold Geothermal 100 840 44.80
37 Grashagi On hold Geothermal 90 711 44.80
38 Hágönguvirkjun On hold Geothermal 150 1,260 44.80
39 Innstidalur On hold Geothermal 45 369 44.80
40 Sandfell On hold Geothermal 90 711 44.80
41 Þverárdalur On hold Geothermal 90 738 44.80
42 Grændalur Protection Geothermal 120 984 44.80
43 Hverabotn Protection Geothermal 90 711 44.80
44 Kisubotnar Protection Geothermal 90 711 44.80
45 Neðri-Hveradalir Protection Geothermal 90 711 44.80
46 Þverfell Protection Geothermal 90 711 44.80
47 Blanda II Utilisation Hydro 31 194 49.70
48 Hvalárvirkjun Utilisation Hydro 55 320 49.70
49 Austurgilsvirkjun On hold Hydro 35 228 49.70
50 Blöndudalsvirkjun On hold Hydro 16 92 49.70
51 Brúarárvirkjun On hold Hydro 23 133 49.70
52 Hafrálónsárvirkjun efri On hold Hydro 15 87 49.70
53 Hafrálónsárvirkjun neðri On hold Hydro 78 452 49.70
54 Haukholtavirkjun On hold Hydro 17 99 49.70
55 Hestvatnsvirkjun On hold Hydro 34 197 49.70
56 Hofsárvirkjun On hold Hydro 39 226 49.70
57 Hverfisfljótsvirkjun On hold Hydro 42 243 49.70
58 Hvítá við Norðurreyki On hold Hydro 14 82 49.70
59 Kaldbaksvirkjun On hold Hydro 47 273 49.70
60 Kljáfossvirkjun On hold Hydro 16 93 49.70
61 Núpsárvirkjun On hold Hydro 71 412 49.70
62 Reyðarvatnsvirkjun On hold Hydro 14 82 49.70
63 Skatastaðavirkjun* On hold Hydro 156 1,090 49.70
64 Vatnsdalsárvirkjun On hold Hydro 28 162 49.70
65 Gýgarfossvirkjun Protection Hydro 22 128 49.70
66 Bakkahlaup On hold Geothermal 15 119 57.30
67 Hrúthálsavirkjun On hold Geothermal 20 160 57.30
68 Hveravallavirkjun On hold Geothermal 10 79 57.30
69 Reykjabólsvirkjun On hold Geothermal 10 79 57.30
70 Sandfellsvirkjun On hold Geothermal 10 79 57.30
71 Sköflungsvirkjun On hold Geothermal 90 711 57.30
72 Seyðishólavirkjun On hold Geothermal 10 79 57.30
73 Fljótshnjúksvirkjun On hold Hydro 58 405 60.50
74 Vörðufellsvirkjun On hold Hydro 58 174 60.50
75 Glámuvirkjun On hold Hydro 67 400 nyca
76 Arnardalsvirkjun* Protection Hydro 587 3,404 nyca
77 Bjallavirkjun Protection Hydro 46 310 nyca
78 Blöndulundur Unclassified Wind 200 705 nyca
79 Búrfellslundur Unclassified Wind 100 350 nyca


* The project may be developed in a different way for less environmental impacts, resulting in lower generation.
** 45 MW station at Þeistareykir is already under construction, with the electricity sold (long-term contract).
n/a Projects involving new reservoir for current power stations (turbines may be added, but not necessarily).
nyca Projects that have not yet been officially cost-analyzed.


The list above may change at any time and new projects not listed may be introduced and developed.

Planned 45 MW wind power project of Biokraft in Southern Iceland is not included on the list.

No planned power projects under 10 MW (mainly small hydro) are included on the list.

Cost estimates do not include transmission or connection cost.

The list is up to date @ August 2016.

The Wish-List of the Icelandic Energy Industry

Iceland may offer numerous new renewable energy projects where levelized cost of energy (LCOE) is very low. Or as low as 22.50 USD/MWh.

The weighted average cost (LCOE) for all new projects in Iceland needed to meet increased power demand until 2035, could be as low as 26.93 USD/MWh. This can be seen from a new report published by the Icelandic Energy Industry Association (Samorka). However, to realize such a low LCOE the Icelandic energy industry would have to be able to develop several projects that are currently not classified for development/utilization. When only taking into account projects already classified for utilization, the LCOE is substantially higher or 34.41 USD/MWh. Note that those figures are an estimation by contractors working for the Icelandic Energy Industry Association, and are based on cost-information from the Icelandic National Energy Agency (NEA).

LCOE for Projects in Utilization Category is 34 USD/MWh

The Icelandic government has adopted a special Master Plan for Nature Protection and Energy Utilization, where possible new hydro- and geothermal power projects are classified into three categories. The categories are protection, on-hold, and utilization. Many of the possible new energy projects have not made it into the utilization category.

Iceland-New-Power-Projects-Utilization-Category_Askja-Energy-Partners_August-2016The table at left lists the lowest-cost hydro- and geothermal power projects planned by the Icelandic government to be realized, currently classified in utilization category. Some of these projects have substantial higher LCOE than the lowest-cost projects not categorized for utilization. Note that the list is not absolute; for example the Eldvörp project may be developed before the Gráuhnjúkar project.

As can be seen on the table, the weighted average LCOE for all projects already categorized for utilization, needed to meet increased domestic demand until 2035, is close to 34 USD/MWh. Which probably explains why Icelandic energy companies are now, according to sources within the industry, offering new long-term power contracts where the tariffs are as low as 34-35 USD/MWh (common unofficial starting tariff; the advertised tariff is 43 USD/MWh).

Different Classifications May Offer LCOE as Low as 27 USD/MWh

Being able to offer new power contracts with a starting price close to 34 USD/MWh, may be quite competitive having regard to the international power market. However, Icelandic energy firms are eager to be able to develop projects that have even lower LCOE. Thus, the industry hopes to have several low-cost projects re-classified by the Icelandic parliament (Alþingi).

Iceland-New-Power-Projects-Wish-List_Askja-Energy-Partners_-Twitter-August-2016To reach the lower LCOE of 26.93 USD/MWh, several projects need to be re-classified. Meaning low-cost projects that are now classified as protection or on-hold, would be re-classified as projects in utilization category. This is illustrated on the table at below.

If the energy industry will be able to convince the Icelandic government and parliament to move certain possible projects from the categories of protection and on-hold, to the utilization category, the levelized cost of new generation needed until 2035 may drop from approximately USD 34 USD/MWh to close to only 27 USD/MWh (meaning almost 20% lower cost). So, the projects listed on the table at left can be said to reflect the wish-list of the Icelandic energy industry (the industry hoping to have all these projects listed for utilization).

With IceLink LCOE Could be Somewhere Between 28-37 USD/MWh

The two tables above also illustrate how different selection of projects affect the LCOE when/if the IceLink subsea power cable between Iceland and United Kingdom (UK) will be realized. If power will be exported from Iceland to UK, Icelandic generation naturally needs to increase more than without IceLink (as we have explained earlier here at the Icelandic and Northern Energy Portal). Depending  on which projects will/would be developed with IceLink, the LCOE for new traditional hydro- and geothermal projects could be as low as 28.49 USD/MWh (note that the overall LCOE for all the generation needed for IceLink would be higher, as it is expected that close to 550 MW of wind power would also be developed in Iceland to fulfill the demand of the cable). To reach such a low target for LCOE, 28.49 USD/MWh, the Icelandic energy industry would have to have its wish-list, as shown on the second table, accepted by the Icelandic authorities.


Having regard to projects currently categorized for utilization in the Master Plan, the LCOE will be much higher (with IceLink) than the said 28.49 USD/MWh. The LCOE for new traditional hydro- and geothermal stations currently categorized for utilization and needed for IceLink, is expected to be 37.21 USD/MWh (as can be seen on the first table above). Which is close to 30% more than the low-cost options on the wish-list. Thus the Icelandic government and politicians now face difficult and controversial decisions how to balance the economics and environmental issues, when deciding if changes will be made to the Master Plan. It is expected that a new version of the Master Plan may be adopted by the Parliament (Alþingi) even before the end of this year (2016).

Almost 1,000 MW of New Large Hydro- and Geothermal Power Plants Until 2035

If IceLink subsea HVDC power cable will be constructed, it is expected that totally 954 MW of new traditional large hydro- and geothermal plants will be needed in Iceland. These power plants would be constructed during the next two decades.

IceLink-Kvika-Poyry_New-Power-Stations_Askja-Energy-Partners-Twitter-_July-2016According to the Icelandic Master Plan for Nature Protection and Energy Utilization, the Icelandic government would most likely fulfill the increased demand by permitting the development of twelve new large hydro- and geothermal projects (as listed on the table at left). These are two hydropower projects and ten geothermal projects (or nine projects if Þeistareykir I and II would be defined as one project).

The ten geothermal projects are Þeistareykir I and Þeystareykir II in NE-Iceland, Bjarnarflag and Krafla II in NE-Iceland (Krafla I was constructed almost 40 years ago), Gráuhnúkar and Meitillinn in the Hengill geothermal area in SW-Iceland, Eldvörp and Stóra-Sandvík on the Reykjanes peninsula in SW-Iceland, and Sandfell and Sveifluháls in the Krýsuvík area in SW-Iceland. The two hydropower projects would be Blanda II in NE-Iceand and Hvammsvirkjun in Þjórsá in S-Iceland.

Eldvorp-Geothermal-Area-IcelandAll these twelve projects are already defined in utilization-category in the Master Plan for Nature Protection and Energy Utilization. However, some of these projects are somewhat costly to develop when compared to all possible energy projects in Iceland (which means there are several cheaper options available, although today they are not classified as utilization-projects, by either classified as protected or on hold).

Recently, the Icelandic Energy Industry Organization and some of the power companies in Iceland started pushing for changes of the Master Plan, to have the Icelandic government and the parliament (Alþingi) to include several other lower-cost projects in the utilization-category (we will soon explain the cost-issues further, here at the Independent Icelandic and Northern Energy Portal). As several of the cheapest options for harnessing more hydro- or geothermal power are in environmentally sensitive areas, there will without doubt be strong opposition against major changes of the Master Plan.

IceLink-Kvika-Poyry_Increase-in-Power-Generation_2015-2035_Askja-Energy-Partners-Table-Portal_July-2016If/when the IceLink project will go through, the total Icelandic power generation will have to increase enormously. Most of the new generation, or 7,400 GWh of the total increase of 12,800 GWh in annual production. would be added as exported power to the UK. In this same period (2015-2035) Icelandic general consumption of electricity is expected to increase by 1,700 GWh and power consumption by heavy industries in Iceland is expected to increase by 3,700 GWh. In total, Icelandic electricity generation would thus increase 68 percent in the period 2015-2035. For more on this subject, we refer to the table at left, and our earlier post from last July 22nd.