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Posts by Askja Energy

Mar 4

Data centers in Iceland offer dramatic savings

Businesses overseas are turning to Iceland to host their data, making use of cheaper energy and natural cooling resources. Icelandic datacenters do not only offer very competitive prices, but also reduce carbon footprint and improve green credentials, as they are powered by renewable electricity only (from natural hydro- and geothermal resources).

datacenter-icelandA recent study by PricewaterhouseCoopers found that the operating expenditure of a 10,000 sqf data center in Iceland, over a 15 year period, is USD 130 million cheaper than running it in the United Kingdom or in Continental Europe. Thus, Iceland offers dramatic savings in the long run.

According to Invest in Iceland, a government body provides information to foreign investors, a fifth of data centre costs are spent on power. Half of that is used for cooling. In Iceland, businesses have access free-air cooling all year round and thus saving substantially on cooling costs.

In addition, the electricity is much cheaper in Iceland than in the rest of Europe. In Iceland, data centers are currently being offered power at the price of USD 0.043 (4.30 cents) per kWh, which is less than half of the price which is common in other European countries. This low Icelandic price can be locked up for at east 12 years, offering businesses a clear understanding of operating expenses in the long run.

Furthermore, while cost is one of the major factors attracting data centre investment and services to Iceland, carbon footprint is also an important driver for European businesses to consider Iceland as a location for their data. As European carbon taxes begin to bite, companies are looking towards Iceland’s carbon free data centers as a long-term option to demonstrate their commitment to green IT. Currently, three data centers have been constructed; the Advania, GreenCloud and Verne Global.

Iceland-Data-Fiber-ConnectionsThe Icelandic electricity generation and distribution ranks as one of the most reliable in the world. Thus, Iceland data centers offer 99.999% uptime, and power companies are willing to put that uptime in the contract agreement. Connectivity to the Icelandic data center facilities is provided by redundant, high-capacity, multi-terabit-per-second connections, including Farice, Danice and Greenland Connect.

Volcanic activity in Iceland may have the effect making investors reluctant to invest in data centers in Iceland and same may apply to businesses regarding hosting their data in the country. But the fact is, that large areas in Iceland have no volcanic activity and none seismic risk. In a nutshell, the risk for data centers from natural hazards or extreme weather are no higher in Iceland than in most other European countries.

Reykjavik-Center-WinterThe regulatory environment in Iceland is clear and is built on European standards (Iceland is a full member of the European Economic Area; EEA). Numerous agencies and local governments are willing to assist companies interested in investing. Our readers are welcome to contact us at the Icelandic Energy Portal for more information. You can call us at +354-863-8333 and/or send message through our contact-form.

Feb 25

Icelandic energy in the New York Times

“In a nation with only 320,000 people, the state-owned power company, Landsvirkjun, which operates the Krafla facility, sells just 17 percent of its electricity to households and local industry. The rest goes mostly to aluminum smelters owned by the American giant Alcoa and other foreign companies that have been lured to this remote North Atlantic nation by its abundant supply of cheap energy.”

NYT-Iceland-electric-cable-feb-2013These words are from an article published by the New York Times (NYT) a few days ago. The article describes how electricity generated by harnessing Iceland’s extensive renewable energy sources may possibly be exported to consumers in the European Union (EU). Such an export could result in a very substantial increase in profits for the generating companies in Iceland. The aluminum smelters are paying prices believed to be less than 30 USD per MWh. Which is, according to the NYT, less than half the going rate in the EU and barely a quarter of what, according to the Renewable Energies Federation, a Brussels-based research unit, is the average tariff, once tax breaks and subsidies are factored in, for renewable electricity in the EU.

Currently, Landsvirkjun is conducting a research into the possibility of a submarine electric cable (a High Voltage Direct Current cable or HVDC) to connect the electricity markets of Iceland with the European market. The cable would be approximately three times longer than the link between Norway and the Netherlands, which is currently the world’s longest submarine electricity cable. It is to early to say what would be the preferable connecting point in the EU; it could be Scotland, the Netherlands, Germany, or even Norway.

A connector between Iceland and Europe would not only offer the Icelandic electricity generating companies the possibility of substantially higher price for their product. Such a cable would also make it possible to import electricity to Iceland in periods of low electricity prices at the other end of the cable (such as during the night). The connector would also increase the energy security in Iceland, as the country would be less dependent on keeping large emergency reserves, as it does now. For the EU this would also be an attractive project – not least as the Union’s 27 member states agreed in 2009 to a mandatory target of deriving at least 20 percent of its energy from renewable sources by 2020.

Hordur-Arnarson-Landsvirkjun-CEOLandsvirkjun’s CEO, Mr. Hörður Arnarson, has described the possible cable as a very promising project.  “We have a lot of electricity for the very few people who live here.” Compared with the rest of the world, he said to the NUT, Iceland produces “more energy per capita by far, and it is very natural to consider connecting ourselves to other markets.”

It is expected that final decision on the cable will be taken within two years or so. For more information about the cable and the importance of EU’s energy policy for Iceland, please check out our earlier post on the issue.

Feb 18

Landsvirkjun becomes wind power operator

Last Thursday, the Icelandic power company Landsvirkjun started the operation of two wind turbines close to the Búrfell Hydropower Station in Southern Iceland. These are the first large wind turbines in Iceland.

Landsvirkjun-Wind-Power-Station-erected-1The wind turbines each have a 900 kW capacity (1.8 MW of installed power in total). Together their generating capacity could be up to 5.4 GWh per year. The masts reach a height of 55 metres and each spade measures 22 metres in length. When the spades are at their highest position the unit will achieve a height of 77 metres.

The wind turbines are produced by the German company Enercon (model Enercon E-44). Enercon specialises in manufacturing direct-drive wind turbines, where the the generator produces electricity with fewer turns and thus reduced mechanical stress, increased engine life and reduced energy loss and noise.

The turbines operate at or around full capacity at wind speeds of 15-28 m/sec. Below 3 m/sec and above 34 m/sec, electricity generation stops. They connect to an 11kV underground electric cable running along a road towards Búrfell Hydropower Station. All additional electricity- and data cables are underground, in order to minimize environmental impact.

Landsvirkjun-Wind-Power-Station-erected

The turbines are located in an area with quite stable winds, with medium wind speed of  10-12 m/sec (stronger in winter than summer) at mast height (55 m). The towers and equipment were erected in last December (2012). Since then, Enercon has carried out and completed necessary tests for the project. Now the project has been handed over to Landvirkjun, and the turbines formally started operating. Their generation can be followed in real time at Landsvirkjun’s website.

There are a number of areas in Iceland that show great potential for the successful utilisation of wind energy. The project is part of Landsvirkjun’s research and development project on the advantageous of wind power in Iceland. The main objective of the project is to obtain operational experience with wind turbines far inland and in the Icelandic climate. Various climatic studies will be carried out during operation, including wind measurements and research on icing, the impact of snow, ash and soil erosion as well as the effects on birds and other wildlife.

Landsvirkjun-Wind-Power-Station-erected-3It is also of nterest, that the Icelandic Meteorological Office, Landsvirkjun, the Icelandic Icelandic TSO Landsnet and the University of Iceland are all participants in a special research project called Icewind ,supported by the Nordic Top-level Research Initiative and the Nordic wind energy industry. The project objectives, related to offshore wind, include resource mapping near Iceland and improved land-wind resource map such that full-scale studies can be carried out on the integration of hydro- and wind power in Iceland. This may offer new and very economical opportunities to increase renewable electricity generation in Iceland.

Feb 11

Data centers in Iceland

In 2007, a benchmarking study by PricewaterhouseCoopers  (PWC) showed Iceland to be a favorable location for new data centre activity. The report concluded with Iceland being supportive and welcoming in the respect of issues as governmental legislation, immigration and permits.

Operational cost for data centres in Iceland is minimum due to the low cost cooling and electricity. Presently, the Icelandic power company Landsvirkjun is offering electricity contracts at the price of 43 USD/MWh. Those competitive rates are available as fixed for up to 12 years. Furthermore, Iceland has significantly less of a security risk than almost any other Western or emerging countries. Its geographic location, low population density and lowered post-Cold War strategic value make it an unlikely target for either external or internal forces.

Iceland-Telecom-Cable-MapThe Icelandic infrastructure for telecommunications networks and services is highly advanced. Mobile phone and Internet penetration in Iceland are among the highest in the world. Iceland is linked with Europe and North America via number of fiber-optic submarine systems. They are Farice-1 to the UK (with a capacity of 0.72 terabits per second and was originally installation in 2003), the Danice cable to Denmark and the Netherlands (with a capacity of 5.1 terabits per second), and Greenland Connect which connects Iceland to Canada and the Northeast United States (with a total capacity of 1.9 terabits per second). Additionally, the new Emerald Express trans-Atlantic cable (with a connection to Iceland) is scheduled to be ready for service before end of this year (2013).

Verne Global and Thor Data Center are examples of new data-centres that have started operation in Iceland in recent years. Besides running on low-cost 100% renewable energy, the growing data-center industry in Iceland is also enjoying a major upgrade of the international submarine telecom capacity between Iceland and mainland Europe

Verne-Global-logo-taglineVerne Global is a company that owns and operates a data center campus in Keflavik in Southwest Iceland. The 18-hectare (approximately 45-acre) Verne Global data centre complex is just west of Reykjavik, the capital of Iceland, minutes from Keflavík International Airport. Verne Global’s facility has been designed to fully utilise Iceland’s unique environmental power advantages: 100% powered by renewable energy resources and 100% cooled by the natural environment of Iceland, without the use of chillers or compressors.

The largest investor in Verne is the UK investment foundation Wellcome Trust. Verne Global offers data centre decision makers a 100% carbon neutral and affordable power solution with a very precise pricing predictability, a range of server density options and efficiency without extra expense, using natural cooling. The customers of Verne Global customers range in size from those requiring multi-kilowatts to multi-megawatts. With its headquarters in the United Kingdom, Verne Global is led by an experienced team with proven success in the data centre industry.

Thor-Data-Center-Advania-logoThor Data Center (THORDC) in Hafnarfjordur is owned by the Nordic IT company Advania. The Thor Data Center facility is located 10 minutes from  Reykjavik, and a 30 minute drive from Keflavik International Airport. Due to the physical and natural elements in Iceland and the specific datacenter design, Thor Data Center is claimed to be one of the most energy efficient data centers in the world. It is powered by clean renewable hydro- and geothermal energy sources and offers unique value proposition for companies demanding a reliant and cost effective hosting service in a 100% green, zero carbon footprint  environment.

Feb 4

Mannvit Engineering awarded EU energy funding

Recently, the Commission of the European Union (EU) awarded more than EUR 1.2 billion to several highly innovative renewable energy technology projects within the EU. One of the selected projects is Hungary’s first Enhanced Geothermal System (EGS), with the participation of Icelandic engineering firm Mannvit.

EU-climate_action-logoThe Hungarian EGS project was selected by the Hungarian Ministry of National Development amongst a series of project proposals to participate on behalf of Hungary in a special programme called NER300. The NER300 programme is one of the world’s largest funding programmes for innovative low-carbon energy demonstration projects. The programme will act as a catalyst for the demonstration of environmentally safe carbon capture and storage (CCS) and innovative renewable energy sources (RES) technologies on a commercial scale within the EU.

The programme is run by the European Comission on member state basis. It is funded by the sale of 300 million emission allowances from the New Entrants Reserve (NER) set up for the third phase of the EU Emissions Trading System (ETS). NER300 funding is expected to leverage a considerable amount of private investment and/or national co-funding across the EU, boost the deployment of innovative low-carbon technologies and stimulate the creation of jobs in those technologies within the EU.

Mannvit-Hungary-Well-Data-MapThe project Mannvit is participating in is led by a consortium formed by Mannvit Hungary and EU-FIRE, which is a Hungarian real estate investment and consultant company. Mannvit Hungary is a subsidiary of Mannvit in Iceland, the veteran leader in geothermal power development with decades of experience in developing geothermal resources. The consortium is in a close cooperation with the Hungarian Ministry of National Development. Further development and execution of the project will require input from various engineering and scientific partners, both international and domestic.

The project was awarded almost EUR 40 million, while the total investment cost amounts to over EUR 100 million. This is a pioneering endeavor of creating a commercially viable geothermal resource for power generation in hot dry geological formations in Southeast Hungary. Geothermal energy systems constitute a sustainable source of electricity that is almost entirely free of greenhouse gas emissions. The Hungarian EGS project will produce electricity in an environmental friendly and sustainable way. The project will also provide various opportunities to strengthen the community with prospects in the fields of long-term employment in various sectors, knowledge transfer and development of secondary green industrial or horticultural development projects that will support social and economical development in the area.

Hungary-Geothermal-Heat-Flow-MapThe EGS technology that lays the foundation of the project has an enormous potential to become an important contributor to the energy portfolio, not only in Hungary, but in the greater part the South Danube Region of central Europe. It represents a source of clean and renewable energy and thereby facilitates the EU goal  that 20% of the energy use is to be from sustainable renewable energy sources by 2020.

The Icelandic engineering firm Mannvit offers wide range of services in the fields of engineering, consulting, management, operations and EPCM contracting. The company was founded in 1963 and is employee-owned (more than 100 shareholders). It has headquarters in Reykjavik and branch offices or affiliates in Hungary, United Kingdom, Germany, Chile and the USA.

Other projects and activities by Mannvit on the European continent include mapping of geothermal potential in Serbia and deep drilling exploration project in Slovenia with the purpose to produce electricity. Also, Mannvit is developing geothermal possibilities in Bosnia and Herzegovina. More information about Mannvit can be found on the company’s website.

Jan 29

Iceland Geothermal Conference 2013

The Iceland Geothermal Conference will take place  in Reykjavík on March 5-8 2013. The venue is the new outstanding conference and concert centre Harpa, at the oceanfront in downtown Reykjavík.

Icelandic-Geothermal-Conference-2013The overall theme of the conference is presented as “to share effective exploration methods, learn how to maximize the utilization of geothermal energy from veterans and explore ways to realize geothermal projects with less risk and higher profitability.” The speakers include dozens of specialists in the geothermal sector. You can see the program here.

The conference is a perfect place to meet for utilities, investors, vendors, regulators and government to take an in-depth look at the major steps in geothermal projects. As the conference is positioned in proximity to a region rich in geothermal activity, most of the attending guests will probably also enjoy the field trips offered to selected geothermal areas close by.

Iceland-Geothermal-Plant-SteamGeothermal energy provides over half of Iceland’s primary energy supply. The principal use of geothermal energy is space heating. Close to 90% of all energy used for house heating comes from geothermal resources (low-temperature). Geothermal energy also plays an important role in fulfilling an increasing electricity demand. Other sectors utilizing geothermal energy directly include swimming pools, snow and ice management, greenhouses, fish farming, and industrial uses.

Harnessing geothermal energy is an area of expertise where Iceland has great strength. The Reykjavík geothermal district heating service started operating on a small scale in 1930. Today, it is the largest of its kind and serves close to 60% of the total population of Iceland. Iceland also produces a 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.

Nesjavellir-Geothermal-Power-Plant-IcelandThe use of geothermal energy for industrial uses on a large scale began in Iceland in the late 1960’s. The most recent industrial operation in the country utilizing geothermal energy is the methanol production of Carbon Recycling International in southwestern Iceland. The plant captures carbon dioxide from a geothermal power plant and converts the carbon dioxide into methanol. Currently, the Norwegian company Stolt Sea Farm is constructing a fish farm, that will utilize warm water from a geothermal power plant to produce senegalese sole. In a nutshell, Iceland’s geothermal resources offer numerous interesting opportunities. You are welcome to contact us directly for more information about the Iceland Geothermal Conference and/or with inquiries regarding the Icelandic energy sector.

Jan 21

Gaining from the European green drivers

Electricity prices in Iceland are substantially lower than anywhere else in Europe. While common wholesale prices for electricity in Iceland are equivalent to 25-30 €/MWh, the wholesale prices in Europe are often double that and even more. This winter, for example, the average wholesale price at the European Power Exchange (EPEX SPOT) has been close to 50 €/MWh.

This means that if Iceland would have an electric cable connection with Europe, electricity could be sold from Iceland at a much higher price than being possible in the small Icelandic market. This  makes the European continent, Scandinavia and the United Kingdom a very interesting market for Icelandic generating firms.

STRONG DRIVERS:

Slide21High electricity prices in Europe are not the only driver, creating more demand for Icelandic electricity. Almost all electricity in Iceland is generated by utilizing renewable sources (hydro- and geothermal power). The European Union (EU) has adopted a binding plan to greatly increase the share of renewable energy. According to EU’s Renewable Energy Directive, the Union is going to reach a  20% renewable energy target for 2020 – more than double the 2010 level of 9.8% – as well as a 10% share of renewable energy in the transport sector. The targets will help to cut greenhouse gas emissions and – what may be even stronger incentive – reduce the EU’s dependence on imported energy.

According to the Directive, the member states have taken on binding national targets for raising the share of renewable energy in their energy consumption by 2020. These targets range from 10% in Malta to 49% in Sweden. The national targets will enable the EU as a whole to reach its 20% renewable energy target for 2020 – more than double the 2010 level of 9.8% – as well as a 10% share of renewable energy in the transport sector.

UK AS EN EXAMPLE:

DECC-2011-Figure-2It is noteworthy that to be able to reach the targets, it is expected that for example the United Kingdom needs to add more than 170 TWh of annual renewable energy  by 2020 (UK needs to go from present less than 60 TWh to approximately 230 TWh by 2020). This is according to the 2011 UK Renewable Energy Roadmap (pdf) and the 2012 Update (pdf).

It is not clear how large share new renewable electricity will be of this total renewable energy addition of 170 TWh. However, from the 2011 UK Renewable Energy Roadmap it can be expected that the goal for 2020 may be somewhere between 104-155 TWh of annual renewable electricity generation (as described in a table marked as figure 2 in the Roadmap; shown here above). The current annual renewable electricity generation in the UK is somewhere between 34-38 TWh. Thus, the goal of 104-155 TWh of total electricity from renewable sources by 2020, will call for a new annual renewable electricity production of 66-121 TWh. Possibly, it would be fair to say that the UK needs to add close to 100 TWh to its annual renewable electricity generation. And this is to happen within seven years from now.

HOW ICELAND CAN PLAY A ROLE:

EU’s plan for increasing renewable energy allows the member states to import renewable energy from other countries. Iceland can offer substantial amount of electricity from renewable sources at very competitive prices (currently, the Icelandic power company Landsvirkjun offers new 12 year contracts at 43 USD/MWH, which equals approximately 32 €/MWh). It may be totally realistic that some of UK’s new renewable electricity will come from Iceland.

Slide22Iceland’s hydro- and geothermal power is less costly than for example new wind farms in the UK. In addition, Icelandic hydro- and geothermal power is a stable base-load power, unlike wind and unlike solar.

An electric cable between Iceland and the UK might be a win-win project. UK would gain access to reliable base-load renewable electricity. Icelandic power companies would increase their profits and could utilize the cable to import electricity from the UK when prices there are low (for example during the night, when demand is minimal).

Such a high voltage direct current (HVDC) cable is currently being seriously considered by a group of Icelandic power companies and other stakeholders. This would be a technically and financially complicated project and probably it will take a couple years until any decision will be taken on the matter. For more information you are welcome to contacts us at Askja Energy directly with your inquiries.

Jan 14

Future growth of the Icelandic energy industry

Slide20Iceland has substantial renewable and economically attractive options to increase its electricity generation. The National Power Company, Landsvirkjun, has introduced a vision for possible upcoming projects, that could increase the total annual generation from the present 17 TWh to 33 TWh by the year of 2025.

Almost all of this additional generation of  16 TWh would come from new geothermal- and hydro power projects, but a small share might come from wind power. Almost doubling the electricity production in Iceland in a period of less than 15 years would call for massive investment. However, this investment could be fairly stable over the period, as most of the suggested power projects would be medium scale (and, for example, not as large as the 690 MW Kárahnjúkar / Fljótsdalsstöð Hydropower Plant, that was constructed in the first years of the 21st century).

Slide17Electricity prices in Iceland have been much lower than, for example, in most of Europe. This price gap has been increasing, offering the Icelandic power industry the possibility to raise the electricity price and still be very competitive.

Today, most of the electricity generated in iceland is consumed by the aluminum industry and other energy intensive industries. The long term contracts offer the electricity companies fairly stable revenues, but low profits. The increased price difference between Iceland and Europe may change this situation for the better. Today, Landsvirkjun is offering electricity contracts over a 12 year period, where the price is 43 USD/MWh. This is a very good option for small and medium sized companies, where electricity cost is a substantial share of their production costs.

Several new contacts have already been signed. Two new data-centers are already in operation; Verne Global and Thor Data Center, offering services that run on 100% renewable energy. This growing data-center industry is also enjoying  a major upgrade of the international submarine telecom capacity between Iceland and mainland Europe .

Slide18

Another example of new power contract is an agreement between Landsvirkjun and GMR (Geothermal Metal Recycling), where clean, renewable energy will be supplied to power a new steel and scrap metal recycling plant at Grundartangi in Southwest Iceland. Also, the German industrial holding company PCC and the French construction-materials giant Saint Gobain are considering Iceland as a location for their production.

It is too early to say how fast the Icelandic electricity industry will grow in the forthcoming years. If the electricity prices in Europe will continue to rise, as the consulting and engineering firm Pöyry has been forecasting, Iceland’s competitiveness will increase even further. For more information about these possibilities we recommend a recent analysis by Gam Management; Landsvirkjun’s Renewable Energy Potential and its Impact on Iceland’s Economy.

Jan 7

The largest consumers of electricity in Iceland

Iceland-12-year-electricity-contractsVery few countries in the world offer as competitively priced electricity as Iceland does. Companies that need substantial quantity of electricity (or hot water) and wish to operate within Europe, North America or elsewhere in the OECD, will hardly find better business environment as available in Icelandic. For example, the Icelandic power company Landsvirkjun offers 12 year contracts where the electricity is priced at 43 USD/MWh.

Another fact that makes Icelandic electricity a very attractive option, is that almost 100% of all electricity generated in Iceland comes from renewable sources (hydro- and geothermal power). In addition, the Icelandic power stations and transmission system rank among the world’s best in terms of secure and reliable electricity supply.

The low-cost and reliable Icelandic electricity has led to a strong power-intensive industry in Iceland. Industrial manufacturing products have become the largest part of Icelandic exports, accounting for close to 55% of the total exports (in fob-value). The largest proportion of these exports is aluminum (40% of total exports), which is produced in large smelters by harnessing Icelandic renewable energy.

Slide15

Today, the aluminum industry and other power intensive industries consume approximately 80% of all the electricity in Iceland. Although the aluminum industry is a dominating consumer of Icelandic electricity, new energy related industries and services have started to see Iceland as an attractive location. Examples are foils production for electrolytic capacitors and data centers.

This new interest is understandable, especially when having in mind the high electricity prices in many European countries. And Iceland’s cool weather, good capacity in overseas telecom cable connections, and very competitive electricity prices make the country an ideal location for data storage services. Another example of a new industry is aquaculture, utilizing warm wastewater from the Icelandic geothermal stations. This, and other new upcoming projects harnessing Icelandic energy, will be further described here at the Icelandic Energy Portal in next week.

Jan 2

Overview of the Icelandic energy business

There are three main energy companies in Iceland:

Landsvirkjun (owned by the Icelandic state).
Orkuveita Reykjavíkur (owned by municipalities).
HS Orka (owned by Canadian firm Alterra Power and a group of Icelandic pension funds).

Slide12State-owned Landsvirkjun is by far the largest Icelandic energy company, providing approximately 75% of all the electricity produced in Iceland. Landsvirkjun is responsible for more than 96% of all hydro generation in Iceland, and its share in the generation of electricity from geothermal power is around 11% of the total. Most of the electricity Landsvirkjun generates (80%) is sold to energy intensive industries via long term contracts. The remaining 20% is bought by public utilities and the Icelandic Transmission System Operator (TSO); Landsnet.

Today, Landsvirkjun owns eleven hydropower stations and two geothermal power stations with a combined capacity of 1,895 MW.  The stations generate close to 12.6 TWh annually. Landsvirkjun’s hydropower plants generate around 96% of the company’s total production, while geothermal power contributes around 4%. The share of geothermal power may increase in the forthcoming years with the planned execution of several large geothermal projects in the near future. Lansdvirkjun is one of Iceland’s largest companies.

Orkuveita Reykjavíkur (OR) or Reykjavik Energy is a public utility company that provides electricity and hot water for heating. It is by far the largest local provider of electricity and heating to end-users. The main service area of the company is the larger Reykjavik Metropolitan Area, covering two-thirds of the Icelandic population. Besides producing and distributing electricity, OR sells and distributes both hot and cold water (from groundwater reservoirs). Also it operates an extensive sewage system for the Reykjavik area, as well as some adjacent municipalities. OR’s power-generation plants currently have a total capacity of 435 MW. In total, OR now generates around 2.9 TWh of electricity annually.

HS Orka is the third main electricity-generating firm in Iceland. Until 2007 it was a public company owned by the Icelandic state and few municipalities in Southwest Iceland. It was later privatized and today its largest shareholder is the Canadian Alterra Power, which owns two-thirds of the company. The rest is owned by a group of Icelandic pension funds. HS Orka operates two geothermal power stations, with a total capacity of 175 MW and generates around 1.3 TWh annually.

Slide13Iceland’s two largest energy companies are in 100% public ownership. In addition, there are several small publicly owned generating firms around the country.  In total, more than 90% of all electricity in Iceland is produced by public companies.

Public ownership in the electricity sector is also quite common in many other European countries. The largest electricity generating companies of both Norway and Sweden (Statkraft and Vattenfall) are owned by the government of Norway and Sweden, respectively, and the government of Denmark owns close to 70% of the largest energy company in Denmark (Dong Energy). Even in the United States, the main share of the hydropower industry is publicly owned, either by federal departments and/ or state agencies.

The reasons behind the large governmental share in Iceland’s electricity industry are historical. Ever since the early days of electricity generation in Iceland, the state and  the municipalities have always plaid an important role as providing electricity. However, the electricity sector in Iceland is open to private investment and even to foreign private (and public) investors. Couple of years ago, the Canadian private company Alterra Power became the main owner of Iceland’s third largest energy company; HS Orka. Click here for more information about the Icelandic Energy Business.

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