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Posts from the ‘Energy Data’ Category

Study on energy security in Iceland

The universities IIT Comillas in Madrid and MIT in Boston have completed a research project on the mechanisms of the Icelandic electricity sector. The project was managed by Mr. Ignacio J. Perez-Arriaga, pro­fess­or at MIT.

The project was twofold. Firstly, the current electricity market regime was examined and suggestions made for improvement. Secondly, a simulation of future operation of the power system was conducted, in which a number of scenarios were evaluated in terms of cost and energy security.

Although it was concluded that the operation of the Icelandic transmission system is in many aspects very good, there are certain things that need to be taken into consideration (as explained in Icelandic on the website of the national power company Landsvirkjun):

  1. There is a lack of clear legislation on acceptable norms in terms of energy security. Also, the legislation needs to be clearer on which agency/department is responsible for how to achieve such criteria for energy security, and what tools the responsible party should have to ensure the criteria can be achieved.
  2. Public energy security is not sufficiently guaranteed by the existing power trading system. In their report, the researchers propose how to improve this situation.
  3. Further delays in strengthening the Icelandic transmission system will make energy security in Iceland unsafe. Thera are bottlenecks in the system between regions. Those bottlenecks may contribute to a local energy shortage. The south-west corner of Iceland is at the greatest risk for such shortages. There are different ways to strengthen the transmission and each of them has its advantages and disadvantages.
  4. Wind power is likely to be a competitive alternative to hydropower and geothermal energy, in order to ensure sufficient supply. Opportunities may also be found in negotiating increased flexibility in delivering power to energy intensive industries.
  5. A submarine power cable between Iceland and Europe would better ensure the energy security in Iceland. To make such a project economical, financial assistance would be needed from outside Iceland [for example in the form of similar framework as the British Contracts for Difference; CfD].

This project by IIT Comillas /MIT was funded by the Icelandic National Energy Authority (NEA), the Icelandic TSO Landsnet, and the national power company Landsvirkjun. Presentations from the project can be found on the website of the NEA.

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Prof. Pérez-Arriaga, who was head of this research project on energy security in Iceland, has been a consultant for governmental agencies or electric utilities in more than 30 countries. Prof. Pérez-Arriaga is a member of the Spanish National Academy of Engineering and a Life Fellow of the IEEE. He has published more than 200 papers, been principal investigator in more than 75 research projects and supervised more than 30 doctoral theses on the aforementioned topics. He is a permanent visiting professor at MIT (2008-present) in the Center for Energy and Environmental Policy Research (CEEPR), where he teaches a graduate course on power system regulation, engineering and economics. He was a review editor of the 5th Assessment Report of the Intergovernmental Panel on Climate Change (IPCC).

It should be noted that in October 2015, Mr. Pérez-Arriaga gave a lecture on “the challenge of Energy Security Supply in Iceland”, at the Reykjavík University Arctic Workshop. In his presentation Mr. Pérez-Arriaga referred numerous times to graphs and data from the Icelandic and Northern Energy Portal / Askja Energy Partners, which of course is the main source on Icelandic energy issues. Video recording of the lecture can be seen on Livestream (the presentation starts at 19m:30s, right after an introduction by the President of Iceland).

The green transformation of DONG Energy

Danish energy firm DONG Energy is in the process of selling all its oil and gas business. This is part of a major strategy where DONG is to lead the way in the transformation to a sustainable energy system and to create a leading green energy company.

Away from oil and gas

DONG’s oil and gas business on the continental shelf of Denmark, Norway and the United Kingdom has for decades been a core part of the company. According to Henrik Poulsen, CEO of DONG, the company now aims at selling all its oil and gas fields as one package, already this year (2017).

It has not been revealed who the potential buyer is. According to Danish media the most likely candidates are Maersk Oil and the US private equity fund EIG Global Energy Partners. EIG is the investor behind the company Chrysaor, which few days ago bought a variety of oil and gas fields in the North Sea from Shell.

Focusing on renewable power generation

dong-energy-green-transformation_2016DONG is also transforming its power production, by out-phasing coal. Not long ago coal used to be the overwhelming source for DONG’s (and Denmark’s) electricity- and heat generation. During the last ten years, DONG has reduced its coal consumption by 73% and is now aiming at phasing out coal completely from its power and heat generation by 2023. This will happen by replacing coal with sustainable biomass, at the same time as DONG will increase wind power generation.

dong-energy-mix_2006-2016-1This means that in just one decade, DONG Energy will have gone from being one of the most coal-intensive utilities in Europe to being among the greenest energy companies on the continent, being able to compare it self with Norwegian Statkraft and Icelandic Landsvirkjun.

Thus it may be no surprise that DONG now has launched a competition where Danes can try out their knowledge on green energy – and the winner will be awarded a week travel trip to Iceland. Iceland is of course the only European country fulfilling all its electricity consumption with renewable power generation. In addition, most of Iceland’s heating is supplied by utilisation geothermal sources, making Iceland the greenest energy country in Europe.

dong-energy-award-iceland-trip_2017

Lower cost of wind power

wind-lcoe_2010-2016_lazard_askja-energy-partners-2017The competitiveness of new wind power has been increasing rapidly. According to Lazard, the levelized cost of energy (LCOE) from onshore wind power in USA, is approximately 50% lower now than it was four years ago, and the lowest cost onshore wind projects now have a LCOE that is 33% lower than it was four years ago. As can be seen on the graph at left.

The lowest cost wind projects in the USA now have a LCOE of 32 USD/MWh. The lowest cost projects are mainly wind farms in the US Mid-West, where wind conditions are good, resulting in a high average capacity factor. And even though the lowest cost was steady (did not decline) between 2015 and 2016, new very large wind farms can be expected to offer even lower cost than 32 USD/MWh. For example, Morocco did receive average bids from Enel and Siemens of 30 USD/MWh from its tender for totally 850 MW wind energy projects (with the lowest offer at around 25 USD/MWh).

kvika-poyry_electricity-generation-cost-lcoe-iceland-slide-13-with-more-recent-figures-2For the Icelandic energy sector, it is interesting to compare the figures in the reports from Lazard on LCOE, with a recent report by Kvika bank and Pöyry. In the report by Kvika/Pöyry the LCOE for up to 6 TWh of new onshore wind power in Iceland is set at a fixed price (LCOE) of approximately 51-52 EUR/MWh. This is quite close to the average LCOE for onshore wind in USA as assumed by Lazard in 2015 (shown with red line on the graph at left).

When having regard to Lazard’s most recent report, from December 2016, it becomes obvious that the LCOE for onshore wind has declined further (the blue line on the graph shows Lazard’s average for onshore wind in its report from 2016). What then becomes especially important, is that now new onshore wind projects in Iceland can be expected to be even more economical than new geothermal projects. For more information on this issue, we refer to our earlier post on the subject.

Iceland’s new energy segment

If the IceLink HVDC subsea interconnector between Iceland and UK, will be developed, more than 2,000 new megawatts (MW) of power capacity is expected to be developed in Iceland in the coming two decades. All these capacity additions will all be in renewable power technology. Most of it will be in the traditional types of Icelandic electricity generation, which is hydro- and geothermal power. However, substantial amount of the new capacity will be in wind power, making wind power the fastest growing type of generation in Iceland.

Low-Cost Wind means Slower Growing Geothermal

It is hard to predict with precision how much capacity will be added to each of the three types of renewable generation mentioned above. The table below shows two predictions, one by Kvika/Pöyry and the other by Askja Energy Partners. According to Kvika/Pöyry, IceLink will need approximately 1,459 MW of new capacity, bringing total new capacity in Iceland to 2,137 MW by 2035.

Analysis of Askja Energy shows that Kvika/Pöyry may be over-estimating how fast new geothermal power can be developed in Iceland (and under-estimating the potentials of Icelandic wind power). We at Askja Energy, predict slower growth in new Icelandic geothermal power, and somewhat faster growth in wind power. In addition, it is very likely that new Icelandic hydropower can be developed somewhat faster than Kvika and Pöyry are forecasting in their central scenario.

Table: New power capacity (MW) in Iceland until 2035
Central scenario with IceLink HVDC cable
Forecast by Forecast by
Technology Kvika/Pöyry Askja Energy
Geothermal 722 580
Hydro 865 933
Wind 550 768
Total new capacity added 2,137 2,281

Note that the Askja Energy scenario assumes faster capacity additions in hydropower and wind power than Kvika/Pöyry, but substantially slower geothermal capacity additions. The result is less generation pr. each new MW (thus, higher new capacity needed in total to deliver same/similar generation). All numbers are an estimation and may vary, such as due to what power projects exactly (in each category) will be developed.

Wind Power the Fastest Growing Segment

No matter if the forecast by Askja Energy or the forecast by Kvika/Pöyry will be closer to the real development, wind power can be expected to become Iceland’s fastest growing energy segment. If IceLink will be constructed, no type of generation in Iceland will grow as fast (in percentages) as wind power. As explained on the graph below.

iceland-power-capacity-additions-until-2035_ketill-sigurjonsson-2016The question that remains, is if and when the decision will be taken on IceLink. But even without IceLink, it is likely that new wind power will be developed in Iceland in the coming years, as numerous locations in Iceland offer very high capacity factor for wind turbines.

Surprising claims about IceLink in the Financial Times

The Financial Times (FT) has published an interesting article, titled City financier urges UK support for £3.5bn Icelandic power cable – Plan to send geothermal electricity 1,000 miles under the sea to north-east England. The article is written by Andrew Ward, Energy Editor at Financial Times.

edmund-truell-icelink-hvdc-cableAccording to the article, the City financier Edmund Truell has “plans to open a £200m cable factory in the north-east of England if the government backs his project to build a £3.5bn undersea cable connecting the UK to geothermal power from the hot springs of Iceland.”  Actually, the article draws up a somewhat surprising and/or imprecise picture of the project, as explained here:

IceLink is indeed an interesting project. But is doubtful that Mr Truell’s proposal is the “most detailed” plan on the cable to emerge, as stated in FT. So far, the most detailed official document on the project yet, is a recent report by Kvika Bank and Pöyry (the report was published last summer but is in Icelandic only). Numerous of the comments made by Mr. Truell do not align well with this report.

According to Mr. Truell’s comments to the FT, “Iceland could supply 1.2 gigawatts of baseload power”. From this comment it seems that Mr. Truell has somewhat unclear understanding about how the project is seen by the governments of Iceland and UK.

The plan is not really sending “geothermal electricity” to UK. Nor will the cable serve as access to base-load power, but rather be access to a flexible hydro power source. Readers should note that Iceland’s power system is mostly based on hydropower. The idea regarding the cable is mainly to utilize large hydro reservoirs to offer access to highly flexible renewable power source.

Of course part of the power would be from geothermal sources (and also from onshore wind power which is likely to be constructed in Iceland). But the main power source for the cable would/will be the hydropower. In fact Iceland’s main problems in the power sector now relate to too fast construction of geothermal power plants. As was recently explained here on the Icelandic Energy Portal.

Iceland-Europe-HVDC-Interconnector-Landsvirkjun-Map_Askja-Energy-PartnersIt is possible that the cable would have a capacity of 1,2 GW. However, it is somewhat imprecise that the cable would offer a “supply of 1,2 gigawatts”, as Mr. Truell says to the FT. What really matters is how much electricity would be sent through the cable. According to plans introduced in Iceland, the annual amount is likely to be close to 5,000 GWh (5 TWh). This is the important power figure, rather than the capacity of the cable (which has not yet been decided and might be somewhat lower than the claimed 1,200 MW).

The length of the cable might indeed become 1,000 miles, as Mr. Truell is quoted to say in FT. But according to plans presented in Iceland it is more likely that the length would be closer to 750 miles. In the end the length will of course greatly depend on where the cable will/would come on land in Great Britain. No such decision has been taken yet.

According to reports presented in Iceland, the cost of the cable is not expected to be 3.5 billion GBP, as says in the FT article, but rather close to 2.4 billion GBP (central scenario). Total cost of the whole project would of course be a lot higher figure, due to the cost of new power plants and new transmission lines within Iceland. According to the Icelandic ministry of Industries and Innovation the total cost of the whole project would be 5-6 billion GBP (ISK 800 billion).

According to Mr. Truell, UK would get the electricity from Iceland at about 80 GBP/MWh. This figure is probably 25% to low (when having in mind the cost of the transmission from Iceland to UK). According to Pöyry, likely price would probably not be lower than close to 100 GBP/MWh.

urridafoss-vrirkjunIn the article in FT, it says that Iceland has offered “surplus electricity” to aluminium smelters, and Mr Truell says there is “still plenty left for export”. In reality the situation is a bit more complex. Currently, there is very little surplus-electricity in the Icelandic power system. It is expected that IceLink would need close to 1,500 MW of new capacity.  To be able to supply the subsea interconnector with electricity, Iceland would need to build numerous new and quite expensive power plants. Such plants would harness hydro, geothermal and wind. Also Iceland would need to strengthen its transmission system. So the cable would mean huge new investment in the Icelandic power system and the project is only partly based on “surplus” electricity.

An electric subsea HVDC cable between Iceland and the UK is indeed an interesting opportunity, such as to increase the amount of reliable and flexible renewable energy in UK’s power consumption. And it would be wise for the UK to make the project a priority. However, note that Iceland is not at all an endless source of green power. And the people of Iceland will hardly have much interest in such a project unless receiving strong economical gains from it. In addition the project would/will be a major environmental issue in Iceland, due to impacts from constructing new power plants and transmission lines. And to avoid misunderstanding about the project it is extremely important to have the facts right.

Reykjavík Energy searching for steam

Geothermal developer Reykjavík Energy (Orkuveita Reykjavíkur in Icelandic) is facing problems due to fast declining geothermal wells. To keep up the power generation in its recently constructed 303 MW Hellisheiði Power Station, the company will need to invest close to USD 175 million in geothermal wells in the next six years.

This somewhat serious situation is expressed in a new financial plan for 2017 and forecast for the period 2019-2022, as presented by the company-board of Reykjavík Energy on 3rd of October 2016. Reykjavík Energy (Orkuveita Reykjavíkur; OR) is Iceland’s second largest power company and is the parent company of Orka nátturunnar (ON), which is the power-generating arm of Reykjavík Energy. Reykjavík Energy‘s principal owner is the City of Reykjavík.

665 MW of geothermal power

Iceland’s current geothermal capacity is 665 MW. The Hellisheiði station is one of five large geothermal power plants in Iceland. There are additionally two very small geothermal plants, so there are seven geothermal stations in total.

Reykjavík Energy is by far the largest producer of electricity from geothermal sources in Iceland, with two geothermal stations with a combined capacity of 423 MW. Both stations are in the Hellisheiði/Hengill geothermal area in Southwestern Iceland. Privately owned HS Orka operates two geothermal stations at the Reykjanes peninsula, with a total capacity of 175 MW The national power company Landsvirkjun operates two geothermal stations in Northwestern Iceland, with a total power capacity of 63 MW. The five large geothermal stations in Iceland are as follows:

Hellisheiði geothermal station (303 MW), operated by Reykjavík Energy / ON (OR).
Krafla geothermal station (60 MW), operated by Landsvirkjun.
Nesjavellir geothermal station (120 MW), operated by Reykjavík Energy / ON (OR).
Reykjanes geothermal station (100 MW), operated by HS Orka.
Svartsengi geothermal station (77 MW), operated by HS Orka.

In addition, Landsvirkjun is currently constructing the first phase of Þeistareykir geothermal station in Northeast Iceland (45 MW). With a further second phase at Þeistareykir, which is expected to be developed soon after the first phase will be ready, the Þeistareykir plant will have a capacity of 90 MW. And a total cost of EUR 250 million (equivalent to USD 280 million).

Running out of steam

Reykjavík Energy does not only plan to drill for more steam for the Hellisheiði geothermal station, but also the company will spend close to USD 44 million during next six years in pumping water back into wells (to uphold steam). Thus, in total it will cost the company close to USD 263 million to withhold the power generation of the Hellisheiði station – during the next six years. It is noteworthy that this amount is almost as high as the total cost of building Landsvirkjun’s new 90 MW Þeistareykir station.

iceland-geothermal-hellisheidi-steamThe falling production at the Hellisheiði geothermal station is a reminder of the risk which developers of geothermal power face. Despite extensive research before construction, it is always very important to limit the risk of possible declining steam by developing geothermal power in fairly small steps. In Iceland, it is now generally accepted that each geothermal step should not be larger than 50-100 MW.

Developing geothermal power in small phases offers important information and data about the field. Such a methodology strengthens predictions of how much energy the area can deliver in a sustainable manner. Unfortunately the 303 MW Hellisheiði project was developed without necessary precaution, resulting in unsustainable generation.

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 93 720 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
Notes:
* 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.

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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.

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.

UK-Iceland power cable needs 1,459 MW of new capacity

A subsea HVDC power cable between Iceland and the United Kingdom (UK) would call for proportionally extreme increase in Iceland’s generation capacity. According to a new report by Kvika Bank and Pöyry, Iceland needs to build new power capacity of 2,137 MW to supply both the cable and the domestic demand. The figure for the necessary new capacity for the cable only is expected to be 1.459 MW (as shown on the table below). The rest of the new capacity is to meet expected increase in domestic demand for electricity (until 2035).

IceLink-Kvika-Poyry_New-Capacity_Askja-Energy-Partners-Twitter_July-2016The cable is normally referred to as IceLink. The report by Kvika and Pöyry (available in Icelandic only) claims that high proportion of the needed new capacity for IceLink can be met with wind power (today Iceland has very small wind power industry, as new geothermal- and hydropower projects have been the least costly way to generate electricity in Iceland). The authors of the report expect that 550 MW of new wind power would be constructed to meet demand by the cable.

The second largest increase in Icelandic power capacity would be in the form of hydropower refurbishments (which would probably mostly be new turbines in current hydropower stations). This figure is expected to be 448 MW. However, the report does not explain in a clear manner how these refurbishments would be carried out. From the report it is also somewhat unclear why it is believed that 550 MW of new wind power will be a good opportunity for the business case – instead of for example somewhat less wind power and somewhat more hydropower.

Iceland-Small-Hydro-Power-Bruarvirkjun-Project_9-MWSubstantial part of the expected new Icelandic capacity until 2035 would come from new small hydropower stations. Such new small hydropower stations, each with a capacity less than 10 MW, would in total be close to 150 MW. This would probably mean dozens of new small running-river hydropower projects in Iceland. Such projects tend to be more costly than the traditional large Icelandic hydropower projects. However, high strike price for the electricity make such expensive projects financially viable, according to the report.

According to the report, 276 MW of new traditional hydro- and geothermal power will be needed to meet demand from the cable. Most of this capacity will be in geothermal (245 MW).

IceLink-Kvika-Poyry_New-Capacity-and-Generation_Askja-Energy-Partners-Twitter-_July-2016-2When also taking increased domestic power demand into account, the total new traditional hydro- and geothermal capacity needed by 2035 is expected to be 954 MW; 124 MW in traditional large hydropower and 830 MW in traditional geothermal power. Today, Iceland has 665 MW of geothermal power (and 1,986 MW of hydropower). So the expected increase in utilization of Icelandic geothermal power is quite enormous. It should be noted that figures on traditional hydro- and geothermal power projects in the report are based on the Icelandic Master Plan for Nature Protection and Energy Utilization.

According to the report, considerable part of the new Icelandic power capacity to be developed is to meet expected increased demand from heavy industries in Iceland. Today, heavy industries in Iceland (which are mostly aluminum smelters) consume close to 80% of all electricity generated in the country. According to the report by Kvika Bank and Pöyry on IceLink, all the three aluminum smelters in Iceland will continue their operations in the coming years and decades. And the authors of the report expect that in the coming years and decades power demand of heavy industries in Iceland will increase. It is noteworthy that such assumptions could change dramatically, if for example one of the aluminum smelters in Iceland would close down.

Iceland-Geothermal-Theistareykir-areaFinally we should mention that if/when IceLink will be constructed, it is expected that the total increased power capacity in Iceland will be around 77% (increase from beginning of 2016). The increase in generation will be somewhat more or close to 68%. According to the above mentioned report, all the projects to meet this increase will be developed in the next 15-20 years. We will soon be revisiting this subject, explaining in more details what power projects will be needed to meet this high increase. Obviously such an increase will/would make Iceland’s position as the world’s largest electricity producer even more pronounced.

Iceland is the greenest energy country in Europe

EU-EFTA-Renewable-Share-in-Gross-Energy-Consmuption_Askja-Energy-Partners-2016Probably not many of our readers are aware of the interesting fact that apart from the Scandinavian countries, Latvia is the greenest energy country in the European Union (EU). Only Sweden and Finland have a larger share of green energy in their gross energy consumption. However, the two greenest energy countries in Europe are Iceland and Norway (who are not members of the EU, but members of the European Free Trade Association; EFTA).

On the graph above you can see the share of renewable energy (percentage) in gross final energy consumption of each country within the EU and EFTA (the bars show the top-20 countries).

Iceland and Norway are clearly the leaders, with 77% and 69% renewable energy share respectively (in gross energy consumption). Having in  mind that no country in the world generates as much green power per capita as Iceland, it is not surprising that Iceland has the highest share of renewable energy in the gross energy consumption of all the states within EU and EFTA (with regard to energy consumption, Iceland is actually the greenest of all countries in the world).

Have in mind that the average share of renewable energy in the gross energy consumption of all the countries within the EU is currently close to 16%. And EU has the official and binding goal of increasing this share to 20% no later than 2020.

Europe-Renewable-Share-in-Gross-Energy-Consmuption_Askja-Energy-Partners-2016It is also worth noting that there are European countries outside of EU and EFTA that have very high share of renewable energy in their gross consumption mix (as can be seen on the graph at left). This especially applies to Albania (31%) and Montenegro (37%), which puts these countries in 6th and 8th place respectively (on the European list).

It is also interesting how extremely low the share of renewable energy is in Russia’s gross energy consumption (even hough Russia is the world’s fifth largest hydropower producing country). Also note how low the share of renewable energy is in countries like the UK and Holland. They need to do much better! Finally, note that not all European countries are included on the graph (countries that are not included in the data published by Eurostat, apart from Russia).

Main sources:
Eurostat – Information about consumption of energy
Eurostat – Share of renewable energy in gross final energy consumption
Eurostat – Energy from renewable sources (table 1).

European countries not included on the list above:
Andorra, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Kazakhstan, Lichtenstein, Moldova, Monaco, San Marino, Ukraine, and the Vatican.