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Posts from the ‘Electricity Market’ Category

Earlham Institute in Partnership with Verne Global

The Earlham Institute (EI) as selected Verne Global’s data centre campus in Iceland to investigate the efficiencies of distributing large-scale genomics and computational biology data analysis.

verne-global-data-centre-icelandEI, through Verne Global, will have access to one of the world’s most reliable power grids, delivering close to  100% geothermal and hydroelectric renewable energy. According to a story on Yahoo Finance, Verne Global “will enable the EI to save up to 70% in energy costs […] and with no additional power for cooling, significantly benefiting the organisation in their advanced genomics and bioinformatics research of living systems.” The power cost for EI in Iceland is said to be 40 GBP/MWh, which at current exchange rate is close to 50 USD/MWh.

One of EI’s goals is to understand crop genomes so new varieties can be developed to secure food supply in the face of a growing population and environmental change. In an announcement, Dr Tim Stitt, Head of Scientific Computing at EI, says that modern bioinformatics is driven by the generation of ever increasing volumes of genomic data requiring large and collaborative computing resources to help process it quickly and at scale. “At EI, we have some of the largest computational platforms for the Life Sciences in Europe and the demand for our computing capability is only increasing, putting pressure on the capacity and operational costs of our existing data centres.”

tim_stitt_earlham-instituteIn a video posted on EI’s website (also available on Vimeo), Dr Stitt further describes why moving their High-Performance Computing  (HPC) workload to Iceland made economic sense. To tackle the big data requirements of EI’s genomics and bioinformatics research in decoding living systems, EI wanted to explore the benefits of remotely managing its HPC resources. Mr Stitt explains that the Verne Global Icelandic campus provides an economical solution by protecting against energy price inflation over the next 10-20 years, with their environmentally friendly and fully sustainable power supply. In addition, the cooling is free and optimised design infrastructure is to reduce the total costs of EI’s scientific computing infrastructure.

This is obviously a very positive development for the Icelandic data centre industry. Which can be expected to experience rapid growth in the coming years.

Does Facebook Not Want Truly Green Data Centers?

facebook-zuckerberg-datacentre_screen-shot-2017-01-22-at-18-14-02Two years ago, we where wondering if Apple does not want truly green data centers. Now we might ask if this also applies to Facebook. Because it seems that Facebook is in fact not to keen on truly green data centers.

According to an announcement published in last January (2017), Facebook is going to build a new data centre in the Danish city of Odense, on the island of Funen (Fyn) west of Copenhagen. At a press conference with local authorities, the California-based tech company said this data centre to be the companies third such facility outside of USA.

And Facebook’s director of data center operations, Niall McEntegart, was quoted saying that “the Odense data centre will be one of the most advanced, energy-efficient data centers in the world”. It was also stated by Facebook management that the Odense data centre will be powered exclusively by renewable energy.

This is going to be an investment of more than USD 100 millions, and will provide 150 jobs when operational (in 2020). But in fact this new data centre will hardly be powered by 100% renewable energy.

denmark-gross-electricity-consumption_1990-2015-with-forecast-to-2025_table-from-energinet-denmark_sept-2016Surely Denmark generates substantial amount of its electricity by utilising renewable sources (mostly wind). Also, Denmark has interconnectors with major hydro power countries, like Sweden and Norway. However, the fact is that very large share of the electricity people and businesses in Denmark consume, is generated by burning fossil fuels (mostly coal).

According to the most recent information from the European Union, (see table here), the renewable’s share of Denmark’s gross electricity consumption in 2014 was close to 45 percent. More recent information from the Danish transmission system operator (TSO), Energinet, tells us that the share of renewable energy in net generation of 2015 was close to 67%. And according to Energinet, even in 2025 fossil fuels will be an important part of Denmark’s power mix (as explained on the graph at left).

facebook-data-centre_odense-denmark-electricity-supply-mapHaving regard to the facts, it is hardly correct to say that a data centre located in Denmark, connected to the grid.  will be run entirely on renewable energy sources only. Obviously Facebook intends to buy so-called Green Certificates, which are a tradable commodity proving that certain amount of electricity is generated using renewable energy sources only. However, this does not mean that the electricity being consumed by the buyer of the certificate is from renewable sources – it might as well be from a coal power station in Denmark or from a nuclear plant in Sweden.

The result is that every data centre in Denmark, connected to the grid, will in fact be using electricity from all kinds of power plants, including for example coal power stations. If Facebook truly wants to run its data centre on 100% renewable energy, the company should connect the data centre to a grid that only delivers electricity from renewable sources. In Europe probably no grid comes as close to this as in Iceland.

Iceland produces close to 99.9 percent of its electricity by utilising hydro- and geothermal power (and some wind power). So instead of claiming its data centre in Denmark being powered by 100% renewable energy, Facebook should consider Iceland as the location for its next data centre in Europe.

Cost of IceLink Power Cable: 2.8 billion EUR

According to a new report by Kvika Bank and Pöyry, prepared for the Icelandic Ministry of industries and Innovation, a subsea power cable between Iceland and the United Kingdom (UK) will cost EUR 2.8 billion (USD 3.1 billion).

HVDC-Icelink_Cost_Feb-2016-3This central cost scenario includes the 1,200 km long cable with a capacity of 1,000 MW, and the converter stations at both ends of the cable. When adding the onshore transmission installations needed in Iceland for connecting the cable to the power system, the total cost (central scenario) will be close to EUR 3.5 billion (USD 3.9 billion).

The report and additional material on the IceLink-interconnector can be downloaded from the Ministry’s website (the report is in Icelandic only). Note that all cost figures quoted in this article refer to the report’s central export scenario (there are several other scenarios, including a smaller cable of 800 MW).

To realize the project, it will be necessary for the British government to make a commitment of a minimum strike price of approximately 96-99 GBP/MWh (close to 130 USD/MWh).

HVDC-Icelink_strike-prices_Feb-2016-2Such a strike price would be quite similar to the strike price for new nuclear energy in the UK (as explained on the website of the UK government). And it would be substantially lower than recently agreed strike prices for new offshore wind power.

Now it has to be seen if the UK government wishes to pay GBP 115-120 for megawatt-hour of offshore wind power generated in British waters, or pay GBP 96-99 GBP for Icelandic renewable energy.

It should be noted that most of Iceland’s generation is and will be produced by hydropower and geothermal power (wind power in Iceland will increase but still be fairly small share of the total generation). This offers IceLink the possibility of much more flexibility than new British offshore wind power does. We, here at Askja Energy Partners, will soon be explaining further how the Icelandic power for IceLink will be generated.  Stay tuned!

Decreased Revenues pr. MWh from Smelters in 2015

Last year (2015), the price of aluminum dropped from what it was the previous year (2014). Iceland has three aluminum smelters and Landsvirkjun (the National Power Company) generates great amounts of electricity to these smelters.

One of the three smelters, Rio Tinto Alcan (RTA) in Straumsvik or ÍSAL, pays fixed power price (the tariff is linked to US Consumer Price Index; CPI). This contract between RTA and Landsvirkjun was made in 2010, with additions in 2014. The other two smelters have power contracts based on a different model, where the tariffs are linked to the price of aluminum (as the aluminum price is at the London Metal Exchange). These two contracts are from 1999 and 2003 respectively. The contract from 1999 is with the Norðurál smelter of Century Aluminum at Grundartangi, and the contract from 2003 is with the Fjarðaál smelter of Alcoa on Reyðarfjörður.

Electricity-Tariffs-to-Aluminum-Smelters-in-Iceland_2005-2015-and-likely-price-increase-to-Nordural-Century-2019_Askja-Energy-Partners-2016Because of the two contracts having the tariffs linked to aluminum price, revenues of Landsvirkjun pr. each sold MWh to the smelters in 2015 were lower than in 2014.  The graph at left shows how the power price paid by each of the three smelters developed in the period of 2005-2015. Each bar shows the average price of electricity each year, with regard to each smelter. Note that transmission cost is included in the tariffs (the average transmission cost is close to 6 USD/MWh). Landsvirkjun then forwards the transmission payment to the Icelandic TSO; Landsnet.

As can clearly be seen from the graph, the smelter of Norðurál (Century Aluminum) pays the lowest tariff. The smelter of Fjarpaál (Alcoa) pays a slightly higher tariff than Norðurál. The smelter at Straumsvík (Rio Tinto Alcan) has the most recent contract and is currently paying the highest tariff of all the three smelters.

Aluminum-Smelter-in-Iceland-WinterObviously, Landsvirkjun is taking substantial risk when it agrees on having the tariffs linked to aluminum price. At the same time the low tariffs, linked with aluminum price, make the Icelandic smelters of Alcoa and Century Aluminum almost financially risk-free operations. Century has come close to acknowledging this, by stating that its Grundartangi smelter in Iceland “generates significant free cash flow in virtually all price environments”.

Currently, a new power contract of Landsvirkjun and Century Aluminum is being negotiated (the old contract from 1999 runs out in 2019). It seems likely that Landsvirkjun will offer Century a similar deal as Rio Tinto Alcan got in 2010. Which means that from 2019, we may expect that Century’s Icelandic smelter at Grundartangi in Southwestern Iceland, will be paying close to 34 USD/MWh (in todays value), as marked with a red arrow on the graph above. However, it might be a better deal for Landsvirkjun and its owner (which is the Icelandic State) to sell the power to Europe via HVDC cable. With regard to this, it should be noted that the governments of Britain and Iceland are now in discussions on the possibility of such a cable.

NB: Power tariffs to the three smelters are estimated by Askja Energy Partners, with regard to annual reports of Landsvirkjun and several other information as published by CRU Group, EFTA Surveillance Authority, et al.

The Icelandic Electricity Market is ON

The Icelandic power market has been experiencing important changes in the last few years. Most important is the increased demand for Icelandic electricity. Which is no surprise, as Icelandic power firms have started offering interesting new type of long-term contracts, were base-load green electricity is made available at very competitive prices.

New Contract by ON and Silicor Materials

Silicor-Materials-Plant-at-Grundartangi-IcelandA good example of the recent trend in Iceland’s power market, is the new contract between Orka náttúrunnar (ON), owned by Reykjavík Energy (OR), and the California based Silicor Materials. It was in last September that ON and Silicor signed a power purchase agreement (PPA) for an equivalent of 40 MW of power. The electricity will be utilized at Silicor’s new solar-grade silicon plant, which is being constructed at Grundartangi in SW-Iceland. The contract is for a period of 15 years, with possibility of extension. Power delivery will be starting in 2018.

Moving Away from Low Smelter Tariffs

According to a press release from ON and Silicor, the new PPA raises the price of ON’s renewable energy significantly. What is also very important, is that the power tariff is not linked to the price of the product’s buyer. Thus, this contract is quite different from  ON’s current sales with regard to power-intensive industries. Until now, the said 40 MW have produced power sold to the Icelandic power company Landsvirkjun, which has sold the power to the aluminum industry in Iceland. There, the power tariff has been linked to aluminum price at London Metal Exchange (LME). This kind of risk-factor is not to be found in the new PPA of ON and Silicor.

The Tariff is Close to 43 USD/MWh

According to the press statement, mentioned above, the wholesale price in the PPA is “approaching the retail price” which households in Iceland pay for electricity. This means that the wholesale tariff Silicor Materials will pay for the power is close to 43 USD/MWh. According to analysis by Askja Energy Partners, this means that ON will receive somewhere between three to four times higher price for the electricity sold to Silicor than it is receiving today (from Landsvirkjun).

The New Reality at the Icelandic Power Market

In recent years, the average price of electricity to energy-intensive industries (without transmission cost) in Iceland, have been close to 20 USD/MWh. Thus, it is obviously very important for the Icelandic power industry that new electricity contracts with energy-intensive customers are based on a price that is approaching 43 USD/MWh.

ON-Power-Reykjavik-IcelandHowever, this is not a surprising development. New energy intensive facilities locating in Western Europe or in Northern America have very little chance of getting as positive long-term power contracts as in Iceland. In addition, the Icelandic electricity is 100% generated from renewable sources. And the transmission system in Iceland is renowned for being one of the best and most reliable in the world.

Therefore, it can be expected that in the coming years we will see numerous firms wanting to locate their new production facilities in Iceland. Silcor Materials is only one example; there are already several other examples of both new silicon projects and new data centers in Iceland. Such companies and Icelandic power seem to be a perfect fit.

Positive Interest in IceLink

The British-Icelandic Chamber of Commerce recently organized a seminar titled Interconnecting Interests – Examining the Issues Surrounding a Potential Submarine Cable that Might Supply the UK and Europe with Icelandic Green Energy. The event was held at the Hilton Reykjavik Nordica, with speakers from the energy industry, government and the environmental lobby, discussing the opportunities and difficulties of electricity interconnection.

Deep Knowledge and Experience

This seminar was an excellent opportunity for people to hear the views of specialists with extensive knowledge and experience on the subject. From their presentations it seems quite clear that there is a strong willingness on both the British and Icelandic side to consider the project very seriously.


It was the Icelandic Minister of Finance, Mr. Bjarni Benediktsson, who opened the seminar. He was followed by presentations by Mr. Charles Hendry, former Minister of State for the UK Department of Energy and Climate Change (DECC), Mr. Douglas Parr, Chief Scientist and Policy Director of Greenpeace UK, Ms. Charlotte Ramsay, Head of Commercial Regulation and New Business at UK National Grid, and Mr. Edward M. Stern, President and CEO of Power Bridge. Mr. Hörður Arnarson, CEO of Icelandic power company Landsvirkjun, took part in the Panel after the presentations.

Probable Electricity Price in the Range of 80-140 USD/MWh

In their presentations and discussions, speakers at the seminar discussed the matter in general terms rather than for example specifying detailed cost or revenue numbers. However, it can be argued that the power price for electricity sold from Iceland to the UK can be expected to be in the range of 80-140 USD/MWh.

Statnett-Norway-Denmark-Viking-ConnectorThese figures are the wholesale price for the electricity; the transmission cost is not included. At this stage it is not possible to give a precise number for the transmission cost via the subsea cable, but according to a recent report by McKinsey it could be close to 30-40 USD/MWh. This would mean that the total cost for the green electricity from Iceland could be between 120-180 USD/MWh.

Having in mind recent Contracts for Difference (CfD), where new British offshore wind power projects have received commitments for power price in the range of 180-240 USD/MWh, the Icelandic electricity could be very competitive. With regard to this, it is also very important to keep in mind that Icelandic hydro- and geothermal power is much more reliable power-sources than offshore wind in the UK.

Great opportunities for Both Iceland and the UK

For the UK, an interconnector to Iceland would give access to substantial amounts of reliable green electricity. Icelandic hydropower reservoirs make the Icelandic electricity generation perfectly steerable, thus an excellent source for power at times of high demand in the UK.  For Iceland, a submarine cable to the UK could also have numerous positive effects. Besides increased security of supply by linking the Icelandic electricity transmission system with another electricity market, the IceLink could offer positive returns for the Icelandic electricity sector.

Iceland-UK-HVDC_Cable-Route-Bathymetry-nordic-seasPresently, most of Iceland’s electricity is sold at very low prices to heavy industries. New sale-contracts with several data centers and silicon plants will mean rising average power price. However, when having in mind that last year (2014) the average wholesale price from Landsvirkjun was just above 20 USD/MWh, it would obviously create very interesting opportunities for increased profitability selling electricity to the UK at 80-140 USD/MWh. The conclusion seems to be clear; IceLink has potentials to be an excellent win-win project for both Iceland and the United Kingdom.

Electricity Tariffs to Aluminum Smelters in Iceland

In this article you will find information about the electricity prices which the three aluminum smelters in Iceland paid to the Icelandic power company Landsvirkjun in the period 2005-2014. The information is based on several Icelandic and international reports.

  • The Norðurál smelter (Century Aluminum) pays the lowest tariff.
  • The Fjarðaál smelter (Alcoa) pays a slightly higher price than Norðurál.
  • The tariff to the Straumsvík smelter (Rio Tinto Alcan; RTA) is presently the highest.

Very low tariffs to Norðurál (Century Aluminum) and Straumsvík (Alcoa) are the reason for extremely low average price of electricity to aluminum smelters in Iceland. With regard to the low tariffs, it is not surprising that Century Aluminum has stated, that its Grundartangi smelter in Iceland “generates significant free cash flow in virtually all price environments”. The same situation is likely to apply to Alcoa’s Fjarðaál smelter, as it pays on average only approximately 10% higher price for the electricity than Norðurál (Century) does.

Since late 2010, the Straumsvík smelter of RTA has paid a substantially higher price for the electricity than the other two smelters. Before 2010, RTA enjoyed the lowest electricity tariff of all the aluminum smelters in Iceland. With the new contract between Landsvirkjun and RTA in 2010, the base price increased and the power tariff was no longer linked to the price of aluminum.

So far, the new contract between Landsvirkjun and RTA is the only energy contract with aluminum smelters in Iceland where the electricity tariff is not linked to aluminium price. Instead, the price in this new contract is adjusted according to US Consumer Price Index (CPI).

Although the tariff to RTA is much higher than to Alcoa and Century Aluminum, the price to RTA is quite modest. For example, it is much lower than the average price of electricity to aluminum smelters in the United States (USA). And the said tariff is similar or even lower than the average power tariff to aluminum smelters in Africa.

Aluminum-Electricity-Tariffs-to-Smelters-in-Iceland_2005-2014_and-World-Comparison_Askja-Energy-Partners-2015The graph shows the average annual electricity price paid by each of the three aluminum smelters in Iceland to Landsvirkjun, in the period 2005-2014. All prices on the graph include transmission. The red columns are the electricity price to Norðurál at Grundartangi (Century Aluminum), the green columns are the electricity price paid by the aluminum plant at Straumsvík (Rio Tinto Alcan; RTA), and the light blue columns are the tariffs to Fjarðaál in Reyðarfjörður (Alcoa). Note that readers should presume a confidence interval of 5%.

The tariff to Straumsvík (RTA) is currently approaching 35 USD/MWh. In 2014, the smelter in Straumsvík paid almost 45% higher power tariff than Fjarðaál (Alcoa), and close to 60% higher price than the aluminum smelter at Grundartangi (Century).

Landsvirkjun’s average price to the aluminum smelters in 2014 was slightly above 26 USD. Same price for aluminum smelters in Africa that year was about 30% higher, and comparable prices to smelters in the USA and Europe were close to 45% higher. For more information about average power tariffs to aluminum smelters in the world in 2014, we refer to our earlier post; Electricity Tariffs to Aluminum Smelters.

Historically, all electricity sales by Landsvirkjun to the aluminum industry has been linked to aluminum prices (until 2010). Therefore, the tariffs and Landsvirkjun’s revenues have often fluctuated dramatically – according to changes in price of aluminum on the London Metal Exchange (LME). Such fluctuation can clearly be seen on the graph above, especially with regard to the period 2008-2010. Note also that in 2006-08 the price of aluminum was exceptionally high, hence the power tariffs to the smelters in Iceland were unusually high in that period.

From 2019, more contracts with the aluminum smelters in Iceland will be expiring. With regard to the electricity price in the recent contract between Landsvirkjun and Straumsvík (RTA) and other new contracts with smelters in the world, it can be expected that the minmum tariff in renewed contracts with the smelters will not be under 35 USD/MWh (in 2014 prices), and possibly somewhat higher. We at Askja Energy Partners will be presenting frequent news and update on this interesting subject.

Electricity Tariffs to World’s Aluminum Smelters

The graph below shows the average price of electricity to aluminum smelters in different regions of the world (in 2014). The graph both illustrates  the relative amount of aluminum production in the major aluminum production areas/countries, and the electricity tariffs. All prices on this graph include both electricity and transmission cost

Aluminum-Electricity-Tariffs-World-and-Iceland-Landsvirkjun-2014China has become the world’s largest aluminum producer. This is an interesting fact, not least when having in mind that the smelters in China pay on average much higher electricity tariffs than smelters elsewhere in the world.

Iceland is represented by red color on the graph. Note that the column for Iceland includes only the power sold to smelters from the National Power Company (Landsvirkjun). Two other power firms in Iceland also sell power to one of the aluminum smelters in Iceland (there are three smelters in Iceland, owned by Alcoa, Century Aluminum, and Rio Tinto Alcan). However, Landsvirkjun is by far the main electricity provider for the smelters in Iceland. Thus, the average electricity price to the aluminum smelters in Iceland is very close to the average price the smelters pay to Landsvirkjun. Which was just above 26 USD/MWh in 2014.

Aluminum production in Iceland is relatively unimportant in the global context (about 0.8 million tons of the total of close to 54 million tons in 2014). What is more interesting, is the fact that the electricity price the smelters pay Landsvirkjun (the average price) is one of the lowest in the world. In 2014, it was close to being exactly the same as the average price to smelters in the Middle East (which are mostly smelters in the Persian Gulf States, taking advantage of very cheap electricity from natural gas power stations). And the average price to smelters in Iceland is only slightly higher than the average price to aluminum smelters in Canada, and much lower than the tariffs to smelters in the USA.

However, the average price to aluminum smelters in Iceland is likely to increase substantially in the coming years – when major contracts are up for renegotiation.  Next such power contract is a contract between Landsvirkjun and Century Aluminum, regarding the Norðurál Smelter at Grundartangi. The present contract expires in 2019.

Norway’s Subsea Interconnectors

The following article is by Mr. Björgvin Skúli Sigurðsson. Mr. Sigurðsson is the Executive Vice President of Marketing and Business Development of Icelandic power company Landsvirkjun. The article was originally published in Icelandic, in the Icelandic newspaper Morgunblaðið. This translation into English is by Askja Energy Partners:

Norway’s Subsea Interconnectors

According to Norwegian energy policy, the resources are utilized to create maximum value for the country. Norwegians sell oil on the international market and with new subsea interconnectors they are increasingly becoming important players at the European electricity markets.

Bjorgvin-Skuli-Sigurdsson-VP-LandsvirkjunThe NorNed cable between Norway and the Netherlands is the world’ longest submarine interconnector, 580 km long. It started operating in 2008, after more than two years construction period. Today, four submarine electric cables link Norway and Denmark, the most recent one from last March (2015). Danes have constructed  numerous wind parks and when the wind is not blowing in Denmark (thus limited electricity production) the links to Norway are used to transport  hydropower between the countries.

Three Submarine Cables Being Planned 

Norwegians now have three submarine cables under planning. The largest project is the NSN-cable between Norway and the United Kingdom (UK). It will be 700 km long, thus becoming the world’s longest subsea interconnector when it starts operating in 2020. The NordLink-cable between Norway and Germany will be 570 km. Like the NSN-cable, the NordLink  is scheduled to become operational in 2020. The third project will be one more cable between Norway and UK, the NorthConnect.  The Norwegian state-owned energy company Statkraft expects that other cable projects of similar size will take place before 2025.

Constructing subsea cables is a complex issue. For example, the NSN-cable will cross at least 14 gas pipelines which extend from drilling rigs in the North Sea. Also the cable route must take notice of the busy marine transports and fishing.

Electricity Prices in Norway

Norwegian households are highly dependent on electricity, as most buildings have electric heating. In dry periods, when water in the Norwegian reservoirs is limited, the electricity price can be volatile. It may sound strange to some people, but the Norwegians have emphasized the importance of having subsea interconnectots to their neighbouring countries to keep electricity prices down, especially as a result of the high electricity prices during the drought of 2003. According to Norwegian authorities, electricity prices in Norway after 2008 would have been higher if the NorNed cable would not have come into operation.

Danish Interconnector

Recently Denmark announced plans for a subsea link to the UK. The idea behind the project is to transport wind power from Denmark to the UK, and also use the interconnectors from Norway and Sweden  to Denmark, to transfer the flexible Norwegian and Swedish hydropower through Denmark to the British electricity market.

The author is VP of Marketing and Business Development at the Icelandic power company Landsvirkjun.

Does Apple Not Want Truly Green Data Centers?

Denmark-Electricity-Sector-Mostly-Coal_March-2015Is there such a color as coal-green? This question comes in mind when reading about Apple’s new data center in Denmark. Apple recently announced it will construct two new large data centers in Europe, both to be “run on 100 percent renewable energy”. According to a press release from Apple, “the new facilities will run entirely on clean, renewable energy sources from day one”. These are interesting statements, having in mind that both data centers will be connected to a grid which mostly delivers electricity from fossil fueled power production. Here we will consider if a data centre located in Denmark can truly be said to run all the time on 100 percent renewable energy.

Denmark’s Own Power Mix is Dominated by Coal

Denmark-Coal-Plant-StudstrupværketDenmark generates substantial amount of green energy. According to the most recent information from the European Union (EU), the renewable’s share of Denmark’s gross electricity consumption in 2012 was close to 40 percent. More recent information from the Danish transmission system operator (TSO), Energinet, tells us that the share of renewable energy in 2013 was somewhat higher than in 2012, but still less than half of the total electricity consumption (47.5 percent).

Denmark’s electricity is mainly generated by coal. The Danish government has plans to decrease the importance of coal, but coal still constitutes for more than half of the fuel consumption of Danish power stations. Most of Denmark’s renewable energy comes from wind, which is of course somewhat a fluctuating and unreliable energy source. In 2013 the share of wind in the electricity consumption was almost one-third (32.7 percent).

Connections to Other Countries are Based on Economics Rather than Green Energy

Denmark’s electricity grid is not an island, but connected with its neighbouring countries by several large cables. Therefore, Denmark sometimes exports electricity and sometimes imports electricity. Weather it is exporting or importing electricity depends on the price difference within the larger market area. Normally, Denmark exports electricity during night (because of its large wind power capacity) and imports during the day (when demand goes up and Norwegian and Swedish hydropower stations are utilizing the water in the reservoirs). However, imports and exports of electricity of course always depends very much on how the wind blows in Denmark.

Denmark Imports Power from Coal, Hydro, and Nuclear Power Stations

When Denmark imports electricity, it comes via cables from Germany, Norway, and/or Sweden. The imported electricity can, for example, be generated by fossil fuels (major coal power in Germany), by nuclear power (nuclear stations in Sweden and Germany), or by hydropower (especially from Norway, but hydropower is also a major source in Swedish power generation).


Lately, most of the imported energy has been from Germany (as shown on the diagram at left, which is from the Danish TSO). Coal is the most important source of electricity generation in Germany, accounting for close to half of the generation. In Germany, only ¼ of the generation comes from renewable sources on average. Natural gas and nuclear energy account to close to ¼ of the generation. Thus, electricity imported to Denmark from Germany normally increases the share of fossil fuels and nuclear power in the Danish electricity consumption.

Data Centers in Denmark are Dependent on Fossil Fuels and Nuclear Power

It is highly unlikely that a data centre located in Denmark, connected to the grid.  will be run entirely on clean, renewable energy sources only. For the end-user in Denmark it is impossible to know how the electricity he consumes was generated. Even more important is that Denmark’s electricity mix is dominated by coal power stations.

Denmark-Electricity-Consumption-Mix_1990-2013-and-forecastIn fact every date centre in Denmark can be expected to mostly be run on coal power. Of course companies, including those running data centers, can try to find a generating company that only produces electricity from renewable sources and buy its electricity from that company. But the electricity put into the transmission grid can not be isolated – so to speak – from other electricity on the grid. Therefore, it is of course impossible for the buyer to promise that he is only using or consuming green energy.

It is possible to buy what is called Green Certificates, which are a tradable commodity proving that certain amount of electricity is generated using renewable energy sources only. However, this does not mean that the electricity being consumed by the buyer of the certificate is from renewable sources – it might as well be from a coal power station or from a nuclear plant. The result is that every data center in Denmark, connected to the grid, will in fact be using electricity from all kinds of power plants, including for example coal power stations.

Iceland is the Best Option for Green Data Centers

The only way for a major data center being truly able to run on 100 percent renewable energy is to take power from a grid that only delivers electricity from renewable sources. In Europe probably no grid comes as close to this as in Iceland. Iceland produces close to 99.9 percent of its electricity by utilizing hydro- and geothermal power (and some wind power).

Norway is in a similar situation, producing almost all the power from hydro resources. But Norway also imports power from other countries, thus distributing coal power and nuclear power to end-users. So Norway is not quite as green option as Iceland is.

Regarding Denmark, it is obviously not a very green option at all. The environmental accounting may tell us that a company there has a very low net carbon footprint, but in reality the electricity is not only from renewable sources at all. If Apple or any other firm in Denmark wants to run 100 percent on renewable energy it would in fact either have to disconnect from the grid – or set up its operation in Iceland.