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Posts from the ‘Engineering and Technology’ Category

Serious Geothermal Troubles for Reykjavík Energy

Few months ago, we wrote about the troubles of Reykjavík Energy regarding its 303 MW Hellisheiði geothermal plant. Now, an Icelandic newspaper has looked into the matter, and it seems that the future generation of the Hellisheiði plant is somewhat uncertain. Following is a rough translation of a story published yesterday in the daily paper Fréttablaðið:

hellisheidi-geothermal-plant_reykjavik-energy-2Icelandic energy firm ON, a subsidiary of Orkuveita Reykjavíkur (Reykjavik Energy) has planned a six-year drilling program, costing ISK 13 billion, just to maintain enough steam for the Hellisheiði geothermal plant. The plant was constructed in three phases in the period 2006-2011. If nothing will be done, this fairly new geothermal power plant will experience rapidly falling generation.

Reykjavik Energy has already announced a tender for the drilling of seven new geothermal wells over the next three years. It is not yet known how many new wells in total will be needed to ensure full generation of the plant. But a newly revised plan of ON allows for 15 new wells to be drilled over the coming ten years.

This is somewhat less drilling than ON had anticipated necessary when the power company first introduced its drilling program last autumn (2016). However, the situation has turned out to be more serious than originally thought in 2013, when the company first admitted the problem of falling steam. The fact is, that very soon after the Hellisheiði station was fully constructed it became clear that the plant would also be needing geothermal steam from the nearby Hverahlíð geothermal area.

The geothermal resource at Hverahlíð now supplies Hellisheiði with enough steam for 50 MW of power capacity. The original geothermal area which the Hellisheiði station is utilizing, now only supplies enough steam for 225 MW (but the plant has an installed capacity of 303 MW). In addition to the cost of drilling for more steam, Reykjavík Energy also needs to invest an estimated ISK five billion over the next five years, for re-injecting water into the deep geothermal source.

reykjavik-energy_hengill-geothermal-areasAlready in 2012, the management of Reykjavík Energy had realized that the Hellisheiði geothermal plant was experiencing falling steam, thus not being able to deliver expected sustainable generation. The following year (2013) it was decided to connect the plant with the nearby geothermal area called Hverahlíð. Until then, Reykjavík Energy had been planning a new 90 MW geothermal station at Hverahlíð, to further supply aluminum industry in Iceland.

The new pipeline from Hverahlíð started delivering steam to the Hellisheiði station in early 2016. The cost of the pipeline was more than ISK three billions. If this pipeline-project would not have been realized, Reykjavík Energy would have needed to drill several new geothermal wells, between 2012 and 2014, at an estimated cost of ISK 700 millions for each well. Such drilling project at that time would have been almost impossible, as the company was in critical financial situation.

In 2013, scientists at Reykjavík Energy predicted that due to over-exploitation of the geothermal resource, the performance of Hellisheiði station would decline by an equivalent of seven MW on average annually. By then, the management realised that the time-frame in which the 303 MW power plant had been constructed, had been unrealistically short.

Now it is generally accepted that geothermal resources in Iceland need to be utilized in smaller phases, to ensure enough geothermal steam for the turbines. And the result of each modest step needs to be analyzed before starting on the next phase.

reykjavik-energy_bjarni-bjarnason-ceo-of-the-year-award-2014Bjarni Bjarnason, CEO of Reykjavík Energy and Chairman of its subsidiary ON, now says that soon after the Hellisheiði plant came into full operation, it became clear that the geothermal area utilized by the plant was not performing as the company had hoped for.

“After mid-year 2014, it became clear that the area was not delivering as sustainable power as had been expected. The falling generation was equivalent to loosing 20 MW of capacity each year, which was much more than had been expected when the plant was designed and constructed.”

Bjarnason acknowledges that this outcome was a shock. And he adds that last autumn (2016) when the company was deciding on future plans and budget, the scenario was “very dark”. [It should be noted that Bjarnason was not working at Reykjavík Energy when decisions where taken regarding construction of the Hellisheiði plant].

The situation Reykvík Energy was faced with in the autumn of 2016, was to drill up to 26 new geothermal wells, just to maintain the production of the Heillisheiði plant. The total new investment in the coming five years was expected to be ISK 27 billion – just to keep the generation of the plant stable at a satisfactory level.

hellisheidi-geothermal-plant_on-2At that time the company launched a special program to analyze the geothermal resource. This research lead to a conclusion which is more positive than the previous estimate from last autumn. It is now expected that the drilling needed to keep the production stable will have a total cost of ISK 19 billions.

This lower cost reflects the new estimate of the resource, resulting in fewer new wells needed to deliver enough energy for the plant. The new geothermal wells are expected be drilled both in the Hellisheiði and Hverahlíð areas, and are supposed to maintain enough steam for 285 MW.

Asked if the decision to connect the Hellisheiði Plant with the geothermal area in Hverahlíð was a mistake – given the current need to undertake a major drilling for more steam – Bjarnason points out that the pipeline to Hverahlíð was both successful and necessary to save the operation of the Hellisheiði plant.

“ When we look at our decision [to connect the Hellisheiði plant with the Hverahlíð geothermal area] it was absolutely correct. And the project itself was successful; no technical problems nor accidents occurred during the construction of the pipeline, despite the snowy winter that year”.

reykjavik-energy_hverahlid-geothermal-areaBjarnason also points out that the steam from Hverahlíð has given Reykjavík Energy the opportunity to reduce exploitation of older geothermal areas. And he claims that it has already become obvious that the already explored areas have recovered faster than expected.

The total cost of Hellisheiði geothermal plant so far is about ISK 94 billion (close to USD 850 millions or just under USD 3 million pr. each MW). Having regard to this cost, it is clear that the extra cost due to the new geothermal wells (ISK 19 billions) is significant. However, Reykjavík Energy would in any case have needed to drill new wells to keep the production of the Hellisheiði plant stable. If original plans would have been realized, the company would in any case have drilled one new geothermal well every year (on average) to keep the generation stable.

The Hellisheiði plants generates 20% of all revenues of Reykjavík Energy. The profitability (return on investment; ROI) of the plant is considered not to be acceptable. According to the annual report of Reykjavík Energy for 2015, the combined ROI of the two geothermal plants at Hellisheiði and Nesjavellir was 4.8% for hot water production and 4.9% for electricity generation. This is much lower return than the normal target for profitability in competitive energy services, where 7-8% return may be seen as acceptable.

Whether the new geothermal wells will return the generation at the Hellisheiði geothermal plant into balance, and offer a satisfactory ROI, remains to be seen. The success of drilling for geothermal steam is always uncertain.

Thorsil Secures Sales Contract with Dow Corning

Thorsil-Silcon-Helguvik-IcelandPlans for the new Thorsil silicon plant in Helguvík in Southwestern Iceland are moving well ahead.

Thorsil has already entered into contracts for the sale of 85 percent of the production from the plant which is being constructed in Helguvík. According to the Icelandic business media Viðskiptablaðið, the two sale contracts amounts to a total of 1.3 billion USD over the contract period. The newspaper Mogunblaðið reports that one of the two contracting parties is Dow Corning, which is the largest silicone product producer in the world. The two contracts are said to be for a period of 8 years and 10 years, respectively.

Dow-Corning-Slicon-Production-Thorsil-IcelandWhen in full production in 2017, the Thorsil plant is expected to produce up to 54 thousand tons of silicon metal, as well as 26 thousand tons of silica powder. The plant will utilize close to 85 MW of power capacity, all from Icelandic renewable energy sources. The decision to locate this new silicon plant in Iceland is based on many factors, including very competitive electricity prices and positive tax environment in Iceland.

IceLink Offers Flexibility Rather Than Baseload Power

In a recent publication, Getting Interconnected – How can interconnectors compete to help lower bills and cut carbon?, the British think tank Policy Exchange encourages the government of the United Kingdom (UK) to use subsidies to open up new electricity capacity market to power stations outside of UK. The electricity would then supply the British market via subsea high voltage direct current (HVDC) power cables, often referred to as interconnectors.

Policy Exchange Sees Icelandic Hydro- and Geothermal Power as Baseload Power Source for UK

On its website, Policy Exchange is described as “an independent, non-partisan educational charity seeking free market and localist solutions to public policy questions”. Furthermore, Policy Exchange is said to be “an educational charity with the mission to develop and promote new policy ideas, which deliver better public services, a stronger society and a more dynamic economy”. Its research is supposed to be “evidence-based and strictly empirical”.

HVDC-Interconnectors-Report-Policy-Exchange-UK-2014-1

Unfortunately, it seems that the think tank has somewhat misunderstood the facts, advantages and possibilities of the Icelandic energy resources. In its report mentioned above, Policy Exchange claims that an “interconnector to Iceland would […] be an import-only connection, which would bring baseload Icelandic hydro and geothermal power to the GB market.” According to the report, such an “interconnector, like that to Iceland, which is expected to provide zero-carbon baseload power supply in one direction (i.e. from Iceland to the UK) is most directly in competition with other baseload power sources, such as nuclear power.”

This assumption by Policy Exchange is somewhat inaccurate. It ignores the fact that Iceland’s main source of electricity is hydropower, based on large reservoirs. Although it is true that Iceland’s geothermal- and hydropower resources can be good options for baseload energy, hydropower offers much more valuable characteristics. Here we will explain why an interconnector between UK and Iceland would have considerable better economical (and political) foundations if it is utilized as access to highly flexible renewable power source, rather than baseload energy.

The Think Tank is Not Realizing the Main Advantages of an Interconnector to Iceland

The best opportunity offered by a HVDC cable connecting Iceland and UK, is to harness the Icelandic hydropower resources (and reservoirs) for high demand peak load power in the UK – and as energy storage during low power demand in the UK. Icelandic reservoirs are like natural energy batteries, where Icelandic electricity firms can “store” the energy to the exact period when it is most needed. This makes it possible to manage the electricity genertaion very accurately – and thereby increase or decrease the production with a very short notice in line with changes in the electricity demand. Therefore, hydropower with large reservoirs are excellent system stabilizers. This flexibility or steerability of hydropower also offers possibilities for maximizing the profitability of the electricity production. The result is that utilizing the flexibility of Iceland’s hydro power would be a great benefit to both the UK and Iceland.

HVDC-Interconnectors-Report-Policy-Exchange-UK-2014-3

Steerable hydropower is tremendously important and valuable. The reliable and controllable renewable power source of hydropower from reservoirs is by far the best choice to meet increased (or decreased) electricity demand and balancing the system. This positive feature of hydropower is reflected by the well known concept of pumped hydropower storage, where it makes economical sense to spend electricity on pumping water up to reservoirs. In a nutshell, hydropower plants with large reservoirs can serve as energy storage when electricity demand is low, and when the demand rises it only takes a few moments for the hydropower plant to increase production. This is obviously a very positive feature, such as at peak load times (normally occurring during the day rather than night). It also means that the operator of a hydropower plant can maximize the profitability of the plant by utilizing the flexibility of the plant – by running the plant at full capacity when electricity prices are highest. Therefore, hydropower can be substantially more profitable than other electricity sources.

Having this feature of hydropower in mind, it is quite surprising to see Policy Exchange suggesting to market Icelandic hydropower as baseload energy source. By doing so, Policy Exchange is ignoring the fact that the Icelandic hydropower could create much more value if the business model would focus on peak demand rather than baseload power supply. And this would not only benefit Iceland, but also the UK.

Icelandic Hydropower Would be an Important System Stabilizer for the the UK

In its report, Policy Exchange recommended that the interconnector between Iceland and UK should be one way export of electricity from Iceland and be directly in competition with other baseload power sources, such as nuclear power. This suggestion ignores how the flexibility of hydropower stations with large reservoirs (like in Iceland) makes hydropower quite unique and very different from nuclear power (only gas powered generators have the possibility to respond as quickly to changing system conditions as hydroelectric generators). In fact, nuclear power plants must be run at close to full output all of the time – and they actually need capacity liked pumped hydro storage for excess power at times of low demand. Therefore, it is quite obvious that the main advantage for the UK, by the construction of an interconnector between UK and Iceland, is the access to peak load renewable power from Iceland, rather than baseload.

Iceland-Europe-submarine-hvdc-cable_routesThe interconnector between Iceland and the UK should also be in the role of bringing electricity from the UK to Iceland at periods of low demand in the UK. This would maximize the flexibility and steerability of the Icelandic reservoirs, and at the same time increase the opportunities for the UK to stabilize the British electric system. In this case, the Icelandic reservoirs would act as valuable energy storage for the British electricity market. This is especially important as more and more wind power is harnessed in the UK. More wind power will mean increased fluctuation in the electricity system and call for increased access to reliable flexible power source – like Icelandic hydropower.

It will not only be important to export electricity from Iceland to UK. Exporting electricity from UK to Iceland will also benefit both nations. During periods of low power demand in the UK (such as at nighttime), electricity generated by power plants in the UK could be used to fulfill electricity demand in Iceland. At the same time, water flowing from the Icelandic highlands and mountainous areas would be saved in the Icelandic reservoirs. When electricity demand in UK rises in the morning and during the day, the water in the Icelandic reservoirs would be utilized for generating electricity at high capacity to meet the increased demand. The result is that an interconnector between UK and Iceland offers access to valuable and renewable energy storage, ready for peak load demand – at relatively low price. It is even possible that electricity from the UK might be used for pumping water up to the Icelandic reservoirs from downriver during the periods of low electricity demand in the UK – this pumped water would then be available as a increased power source when demand in the UK rises during the day.

Win-Win Situation

Although Policy Exchange is somewhat inaccurate when it sees Icelandic electricity as basload power, the think tank is correct in its conclusions, when it states that “interconnectors appear to be an attractive option for the British electricity sector”. Policy Exchange is also correct when saying that “British consumers would benefit from importing overseas-generated power which is cheaper than domestic alternatives”. Electricity generated by hydropower (and geothermal power) in Iceland would be less costly for consumers in UK than electricity from for example new wind parks or new nuclear plants. And it is true that an interconnector between UK and Iceland would be “one way of achieving the oft-sought goal in energy policy of diversification of supply” – as Policy Exchange mentions in its report . And such a project would indeed provide both technical and geographic diversification, as the report says.

UK-Policy-Exchange-_Interconnectors-HVDC-Report-Cover-2014In its report, Policy Exchange expresses that the UK wants more electricity from overseas and that there is no good reason to stand in the way of new interconnectors (“we want their electricity; they want our money”) . This argument is e.g. based on the fact that Icelandic renewable electricity would be available to the Brits for less money than the electricity would cost if it was generated at home (in UK). In addition, an Interconnector between UK and Iceland would offer British consumers access to much more reliable energy sources than for example British wind energy can ever be.

Economically and politically it is highly unlikely that the project will ever be realized if the business model is a one-way baseload interconnector. To create a win-win situation for both UK and Iceland the electricity must be able to flow in both directions, where the cable would have the purpose to meet peak load demand and also offer the possibility to utilize Iceland’s flexible hydrpower system as energy storage. Finally, it is worth mentioning that according to the latest news from ABB the technology for an interconnector between Iceland and UK is available.

Iceland and Greenland as Strategic Energy Storage for Peak Load Demand

In 2004, the engineering giant ABB marked the 50th anniversary of its pioneering of high voltage direct current technology (HVDC). In the decade that has passed since then, we have experienced numerous new world records regarding the HVDC technology. An electric cable between Europe and America is probably becoming a question of when, not if.

Strong HVDC Technology Advancement

The first submarine HVDC cable was commissioned in 1954. The cable connected the island of Gotland (in the Baltic Sea) with the mainland of Sweden. This was a 100 kV subsea cable with a capacity of 20 MW and the length was 90 km.

HVDC-Europe-Subsea-2014As earlier mentioned, this first HVDC subsea cable was constructed by ABB in 1954. Fifty years later, in 2004, ABB proudly looked back to its HVDC achievements. Which included the highest voltage cable in the world (600 kV cable in Brazil), the longest HVDC line and highest converter power rate (in China), and the world’s longest underground cable (Murray Link in Australia).

Another of ABB’s achievements in its 50 year history of HVDC technology, was the world’s longest submarine electric cable; the 260 km long Baltic Cable between Sweden and Germany, which began operation in 1994. Now, a decade later, ABB still holds the world record of the longest submarine HVDC cable. It was in 2006 that construction started of the 580 km Norned cable between Norway and Netherlands. ABB supplied the main part of the NorNed cable as well as the converter stations at both ends. With 450 kV DC, the NorNed now has the highest voltage rating of all submarine HVDC cables (on pair with two other cables in the Baltic).

The next world-record-length for a submarine HVDC cable will probably be a cable that will connect Norway and the UK. The cable length will be close to or a little more than 700 km. The planned capacity is 1,400 MW (double the capacity of NorNed) and the voltage 500 kV. Yet, this new cable between Norway and UK will not have the highest voltage of all submarine HVDC cables. Currently, Prysmian and Siemens are constructing the first HVDC subsea cable link in the world with a voltage of 600 kV. This project is the the 420 km UK Western Link between Scotland and Wales.

This high voltage of 600 kV helps increase line capacity by 20% and reduces transmission losses by nearly a third. The Western Link will also set a new world record for capacity of subsea HVDC cables, as it will have a transmission capacity of 2,200 MW. It is Siemens that will be delivering the HVDC converter stations, and Prysmian, which will deliver the cable.

Electric Cable(s) Between Europe and America

The longest electric HVDC cables on land today are 2,000-2,500 km long. (cables in Brazil and China). It is unclear when submarine electric cables will be as long. But it is evident that we will soon experience subsea cables that will be more than 700 km long and operate at more than 600 kV. Predicting further into the future, it seems realistic that the development of the subsea cable technology will reflect what has been happening on land.

HVDC-Europe-America_Hydro-Power_Askja-Energy-Partners-Map-2It is probably just a matter of time until the first electrical cable will be laid across the Atlantic. Cables from Greenland to North America and/ or Europe would be 2,000-3,500 km long. A submarine HVDC cable between Greenland and Iceland could be as short as 800 km. This is a very interesting fact, as Greenland has enormous hydropower resources, that could be utilized as a a peak power source for areas in Europe (where electricity prices are among the highest in the world).

The idea of an electric subsea cable between Europe and America may sound like a fantasy. And it is quite possible that the combined length and depth will stand in the way for such a project. However, as 700 km subsea HVDC cables at 600 kV are becoming a reality, and the deepest subsea electric cables today are already working well at a depth in the range of 1500-1700 m, it seems that cables between Europe and Iceland, Iceland and Greenland, and Greenland and Canada (North America) are all becoming technically possible within a decade or few decades from now.

Renewable-Energy-Integration_Practical-Management-of-Variability-Uncertainty-and-Flexibility-in-Power-Grids_2014Therefore, it is no surprise that it is becoming increasingly more common to see for example articles in international academic journals focusing on the potential of electric cables between Europe and North America. However, in the literature the focus is surprisingly often primarily on the potential of harnessing the wind power (in both Greenland and Iceland). The best opportunity offered by HVDC cables connecting Greenland and/ or Iceland with Canada and/ or Europe, is definitely to utilize the great hydropower resources (and reservoirs) for high demand peak load power. The hydropower is not only a less costly process to generate electricity than wind power; hydropower is also much more reliable and controllable power source than wind. Therefore, the hydropwer has great possibilities for maximizing the profitability of energy production, by producing and selling electricity only at day time when electricity prices are highest and receive more water in the reservoirs at night time.

The total hydropower resources in Greenland are believed to be equivalent to 800 TWh annually. By harnessing only approximately 1-2% of that would be enough supply more than two HVDC cables. Iceland already has a large hydropower sector, based on large reservoirs and modern generating stations, where it is possible to add capacity (turbines) at very low-cost. Thus, Greenland and Iceland could develop a perfect strategic partnership in supplying Europe with peak load energy.

Startup Energy Reykjavik Investment Day

The closure of Startup Energy Reykjavik program was held on Arion Bank head office the 28th may. The program is a mentorship-driven seed stage investment program with focus on energy related business ideas. After 10 intensive weeks, the final teams presented their projects to possible investors.

Startup-Reykjavik-logo-arion-bank

The Minister of Industry and Commerce, Ragnheidur Elín Arnadottir, congratulated and encouraged the teams to start new companies in this strategic sector, and remarked the strong commitment the Icelandic Government has with young entrepreneurs, announcing an increase up to 3% of the GPD for 2016 in research and development programs.

These are the main business ideas that the seven young energy companies presented to investors:

  • DTE Dynamic Technology Equipment is specialized in developing equipment for aluminum industry. They presented their latest innovation, PEA Aluminum (Portable Element Analyzer). This innovative tool allow testing aluminum properties “in situ”, avoiding long time waits from laboratory responses. Their expertise background in the sector and the big market are one of the strengths. Contact: Karl Águst Mattíasson (karl@dtequipment.com).
  • BMJ Energy makes the smartest micro-hydro stations available on the market. Able to use smaller creeks to produce electricity, with their unique control system, they maximize the energy production without the need of big reservoirs.  The company also offers real time monitoring for hydros. BMJ focuses on micro-hydro stations, from 1kw to 50kW. With already some stations working in Iceland, they see their future in the global market. BMJ energy makes every drop count. Contact: Bjarni Malmquist Jónsson (b.malmquist@bmj.is).
  • The objetive of Fjárfestingafélagið Landsvarmi is to introduce heat pumps for district heating in iceland by using the thermal heat source of the ocean. This improvement will reduce the electric consumption in cold areas up to less than half of the current figures. The potential market is the entire artic region, with four million inhabitants. Contact: Kristján M.Ólafsson (kolafsson@kpmg.is).
  • BigEddy provides accurate site assessments for wind farms by combining weather observations with state of the art models that reveal the true potential of prospective sites. Furthermore BigEddy specialises in high accuracy wind energy forecasts to enable operators to accurately predict the production of wind farms worldwide. Contact: Ólafur Rögnvaldsson (or@belgingur.is).
  • Research in geothermal fields are normally costly and time consuming. Geodrone works with unmmanned aerial vehicles (UAVs) with remote sensing technologies to provide customized measurement, a way to reduce cost, time and risk in exploratory stages. Contact: Alicja W. Stoklosa (ailcjastoklosa@gmail.com).
  • Eta-nýtni is developing a plant that produces Sodium chlorate and hydrogen, using sea water. The expected 13 millions of m3 of Hydrogen will be sell in the local market, meanwhile the 20,000t/year of Sodium chlorate will be export for paper industry in Europe. Contact: Gunnar Tryggvason (guntry@gmail.com).
  • Gerosion is a knowledge based company that specializes in solutions for the geothermal, oil and gas industries, in material testing and selection for casings and equipment, in deep high temperature and pressure wells. The company is buying a unique AutoClave pressure vessel with a specific gas injection system, for simulated testing of materials, including metals and well cement grouts, in supercritical conditions. Contacts: Sunna Ó. Wallevik (sunna@gerosion.com) and Kolbrún R. Ragnarsdóttir (kolbrun@gerosion.com).

By Contributing Author: Scherezade D. MartosHydrogeologist,  MSc Sustainable Energy.

Study on Cost of IceLink: 2.7 billion USD

The cost of a 1,200 MW HVDC electric submarine cable between Iceland and the United Kingdom (UK) is likely to be GBP 1.58-1.68 billion (USD 2.63-2.80 billion). This includes the cable (with a capacity of 1,200 MW), converters, cable mobilization, and installation. These cost-figures are presented in a research paper from 2010; Proposed Iceland / UK (Peterhead) 1.2 GW HVDC Cable. The authors are three engineers; Thomas J. Hammons from University of Glasgow in Scotland, Egill Benedikt Hreinsson from University of Iceland, and Piotr Kacejko from Lublin University of Technology in Poland.

LV-HVDC-Iceland-UK-London-august-2012-2The subject of the paper is a 1,200 MW connector from Iceland to a landing point at Peterhead Scotland (a distance of 1,170km). The paper addresses market considerations with cost of electricity in UK (from new offshore and inland wind power, gas, coal, and nuclear), investments for the development of hydro resources in Iceland, investments for submarine cables and converter plant, and overall capacity of the link. Also reviewed by the authors, is the exploration of deep unconventional geothermal resources in Iceland that could be harnessed in future and developed for the IceLink. The economics, availability, and reliability of geothermal plants are reviewed. [The slide above is from a recent presentation by the Icelandic power company Landsvirkjun}

According to the paper, there should be no major difficulties in the manufacture and laying of submarine cables of length and type necessary for the IceLink connector. What is no less interesting is the finding that the cost of delivered energy would be very competitive with offshore and onshore wind, and of new coal/gas and nuclear plant. Also, the connection would offer high reliability; at least equal to that of new coal/gas and nuclear plant in the UK.

The main conclusions are as follows:

  1. Cost of electricity delivered would be very competitive with that from new wind-farms, nuclear, modern gas/coal fired plant, and tidal barrage / tidal stream power.
  2. Availability of the connection should at least equal that from nuclear, and gas/coal fired plant.
  3. No major difficulties are anticipated in manufacturing, laying and repairing the submarine cables or in construction of hydro schemes for the Link.
  4. Expected life for hydro developments is at least 60 years, submarine cables 50 years, and rectifier/inverter stations 30-40 years.
  5. The link could be considerably expanded in future to utilize deep-well geothermal power when the technology is proven.
  6. The contribution would make a significant contribution towards UK and European targets for renewable energy. The development would benefit the Icelandic economy, rather than demanding huge amounts out of a heavily damaged economy without supporting necessary recovery.
  7. The Icelandic hydroelectric system is likely to be a perfect match for interacting with the UK/North sea wind energy resources in a similar way as the Norwegian hydroelectric power system.
  8. The HVOC UK-Iceland link can serve partly as a one­ way exporter of hydroelectric or geothermal energy from Iceland to the UK or it can be considered as a short term bilateral medium for hourly interaction of hydro with marketslwind based on market signals or short term shadow prices. This dual role should be further defined in a negotiation process between the respective national authorities.

IceLink-Study-University-of-Iceland-2010The study can be downloaded here (pdf) from the website of University of Iceland.

UK Will Import More Power from Neighbouring Countries in the Future

LV-HVDC-Iceland-UK-London-august-2012-1According to the UK National Grid, the UK will import more power from neighbouring countries in the future as the country’s electricity margin continues to tighten. The Financial Times recently wrote about how one of the new subsea electric cables to be constructed is likely to be a cable between UK and Iceland (sometimes referred to as the IceLink):

Swiss engineering group ABB last year commissioned a 262 km interconnector to link Ireland’s grid to the UK’s. National Grid is also working on interconnector projects with Belgium, Denmark, Norway and Iceland. About 5-7 GW of additional capacity could flow from the new interconnectors over the next decade or so, said Mr Bonfield. However, some of the interconnector projects are more feasible than others. A link between UK and Iceland may be the best economic option.

LV-HVDC-Iceland-UK-London-august-2012-2Net electricity imports cost the UK about GBP 365 millions in the past six months of 2013, two and a half times more than two years previously, according to data supplied by ICIS, the price reporting agency. Electricity imports can be cheaper than those produced by UK suppliers and are a small but growing part of the country’s overall power supply. Power is produced in France and the Netherlands and imported via subsea interconnectors. Electricity flows both ways but the UK currently buys more than it sells. And there will be a rise in Uk’s power imports, says Andrew Bonfield, National Grid’s chief finance officer .“[This is] because there is a pricing differential which we believe will be beneficial to the country, and ultimately customers.”

National Grid will invest about GBP 3.5 billion this year, most of which will go towards reinforcing its UK transmission infrastructure. Power imports should help National Grid level out peaks and troughs from renewable energy production and deal with the UK’s diminishing electricity margin, which represents the safety cushion of spare power generating capacity (National Grid previously said that the electricity margin during peak demand in cold weather will be 5 per cent, down from more than 15 per cent in the winter of 2011-12). IceLink could become an important part of this strategy, opening access to Iceland’s 100% renewable power geothermal- and hydro power generation.

The two illustrations above are from a presentation by Mr. Hörður Arnarson, CEO of the Icelandic Power Company Landsvirkjun, presented in August 2012.

University Research on HVDC Development

The Icelandic Energy Portal is cooperating with Reykjavik University and the University of Iceland, as scientific and educational partners. Thus, we sometimes introduce research by university scholars and students. Today, we will focus on the findings in a recent thesis towards MSc in Industrial Engineering at the University of Iceland, by Ms. Svandís Hlín Karlsdóttir.

University-of-iceland-MSc-Engineering-1The title of the thesis is “Experience in transporting energy through subsea power cables: The case of Iceland”. It analyses the experience from subsea power cable projects in Europe to bring new aspects and gain more information and insights to this project. The main focus is on technology, reliability and environmental impact. In the thesis, this study of the European experience is transferred to Iceland and is evaluated as to which technology is suitable for Icelandic conditions, what to avoid and what to keep in mind, and also to evaluate the reliability of possible subsea power cables from Iceland to mainland Europe, or to Great Britain.

Technology

The need for increased renewable energy source utilization has forced the technology forward. Challenges are constantly confronted with new developments in technology. The development in material and manufacturing processes has increased power capacity and voltage rating and made the cables more robust. The cable systems are frequently being laid at greater depth and over longer distances. The maximum power capacity is 800 MW (single cable) at 500 kV or 1,000 MW (two cables) at 320 kV, for mass-impregnated cables and extruded XLPE cables, respectively. The key factors to a successful HVDC subsea power cable project is a thorough marine survey to find the most suitable route and for design of the cable. Great expertise in installation method is also crucial, concerning choice of vessel, equipment and crew.

Reliability

Savings in investment cost, which could lower the reliability of the cable system, could result in higher operation and repair cost in the future. When a cable is damaged and is in need of repair, there is always need for a specialized vessel, equipment and crew. That is independent on the size of the damage and could therefore be a big part of the repair. The time waiting for weather can also be very expensive. Additionally there is loss in revenues when no power is transmitted. Those considerations must be optimized during planning and designing of a cable project.

With prior experience and development of subsea cable systems the reliability has improved. From 1986 to 2009 the reliability has improved from 0.264 failures/year/100km to 0.100 failures/year/100km. Operation procedures with real-time monitoring improve maintenance of the system which can prevent major damage to occurring, resulting in better reliability and longer life time of the system.

Environmental Impact

When implementing such a large complex electrical system there are always concerns about the environmental impact. According to the latest researcher and environmental impact assessments in Sweden there are no threats to the surrounding area and it will not suffer permanent damage, from installation and operation of the cable. Latest technological developments have decreased the electrical magnetic field and improved installation methods. The magnetic field is so low that sensitive marine life and ship compasses have not been influenced in a bad way, according to the latest research.

The Case of Iceland

The cable route from Iceland to mainland Europe will lay under the North Atlantic Ocean passing the Faroe Islands and will be approximately 1,170 km long and reach a depth of 1,200 m. The suitable technology for Icelandic conditions is two mass-impregnated single- core cables, each transmitting 500 MW at 400-450 kV in a bi-polar configuration. That solution improves reliability and eliminates magnetic fields. It is recommended to have copper conductor at the shallower parts and aluminum for the deeper colder part because of the increased laying tensions. Cable burial of at least 2 m is recommended for the whole route to protect against external violence where possible.

University-of-iceland-MSc-Engineering-2The failure rate for the subsea cable between Iceland and mainland Europe is estimated at 0.1 failure/year/100 km which results in 1 failure a year. The outage duration for each repair is dependent on fault location and weather conditions. For a fault location near shore there is more accessibility of weather window which reduces outage duration. The outage duration is higher far offshore but there is also less probability of damage, as the cable will be laid at great depth. The availability on the subsea cable is variable between seasons and locations. During winter the access to repair is less than during other seasons. The average unavailability of the system due to damage is estimated at 12% but with less probability of damage at great depth the unavailability is less, or near 10%.

If sensitive marine species can be avoided along the cable route, the environmental impact is estimated to be low. There is no relation between magnetic fields of HVDC subsea cables and threat to marine life and with the cable type recommended there is no danger of chemical impact, or oil leakage. By laying the cables close together the magnetic fields can be eliminated. Landmarks on the sea bottom formed during cable burial is said to recover in approximately one year.

Future Work

Developments in technology are of special interest. Future technology like superconductors and advanced maintenance tools being developed will increase power capacity and minimize duration of outages, resulting in more asset feasibility. Also, the expected future development of extruded XLPE cables will be of importance. Possible future projects could consist of more specific analysis of the sea state to evaluate suitable routes based on reliability of different locations and to collect real operation data from the owners and operators of the HVDC subsea cable systems.

UK National Grid Showing Interest in IceLink

According to news from Norwegian energy information provider Montel, the cost of electric power from the potential subsea interconnector linking the UK with Iceland  will be around GBP 100/MWh (164 USD/MWh). This new subsea cable, which is sometimes referred to as the IceLink, would thus offer electric power at substantiall lower prices than for example from offshore wind.

Icelink-HVDC-UK-NG-nov-2013-5The IceLink would be a high voltage direct current (HVDC) cable, with a power capacacity of 700-1,000 MW.  It would be 1,000-1,500 km long, making it qute a bit longer than any existing subsea cable of this kind today. The longest subsea electric cable is currently the 580 km NorNed cable between Holland and Norway. Longer cables of this type are being planned, such as a cable between Norway and the United Kingdom that will be more than 700  km long, and even longer cables in the Mediterranean.

Mr Hörður Arnarsson, CEO of the Icelandic  state owned power company Landsvirkjun has expressed that the Icelink cable could add “very valuable” flexibility to offset intermittent renewables production in the UK. Landsvirkjun generates 75% of all electricity used in Iceland.

Icelink-HVDC-UK-NG-nov-2013-4In May 2012, Icelandic and UK ministers signed a memorandum of understanding over a new interconnector between the countries. The UK TSO National Grid has been showing interest in the Icelink, focusing on issues such as supply diversification, and gaining access to the reliable hydro- and geothermal energy resources of Iceland.

In the last few months,Mr. Paul Johnson, Project Director and Head of Cables at National Grid, has at numerous occasions expressed that the need for such an interconnector between Iceland and the UK has come to the fore. According to Mr. Johnson, the IceLink is a realizable goal and there is political will for the connector. Mr. Charles Hendry, MP and former UK Energy Minister has been of the same opinion, as the IceLink project offers low-risk, predictable returns attractive to investors, such as pension and infrastructure funds.

Icelink-HVDC-UK-NG-nov-2013-7

According to Montel, the costs of the IceLink are estimated at GBP 4 billion, with it being possibly completed by 2022. The project could supply up to 5 TWh of power annually to Britain from hydro, geothermal and wind sources in Iceland.

While Icelanders still need to engage in national discussions about the costs and benefits of a subsea power cable to the UK, policy makers in the UK seems to agree on the project. In addition, the President of Iceland, Mr. Ólafur Ragnar Grímsson, has addressed leaders and people in the energy business, expressing his view that the Icelanders and the Brits should jointly examine the options of an interconnector.

Iceland-UK-BICC-meeting-Nov-2013-ORG-2At an energy conference in London in last November (2013), Mr. Grímsson said the proposed IceLink should be hard-headed analysis driven by engineers and energy specialists. “We should listen to the government in Britain…then in two to three years we can come back to the table and make the real decision.”

Grimsson said popular support was necessary before a project to bring geothermal power from Iceland to the UK could get off the ground. “As we move forward we need to bring all segments of Icelandic society into this discussion,” he said. “Then we will take a decision based not only on the business sense and the technical feasibility [of the project] but on the national will,” Grimsson said, adding that unless “there is a broad national will behind this, you will never get the necessary players on board”.

The three slides above are from a presentation given by Mr. Paul Johnson from UK National Grid, at the Bloomberg Icelandic Energy Summit. It took place in London on November 1st 2013.

The Bitcoin Mines of Iceland

Earlier this month (December 2013), an article in the New York Times told us about the mines of bitcoin that are situated “on the flat lava plain of Reykjanesbær” in Iceland. This article, and several other recent articles in the world’s media about bitcoin, have put a limelight on Iceland’s extremely reliable hydro- and geothermal power. Where companies are offered long time electricity contracts at excellent predictable rates. And the bitcoin mines in Iceland are good example of how Iceland is well situated as a very accessible data storage centre.

Bitcoin-imageBitcoin is of course the decentralized digital currency and payment network, created few years ago by pseudonymous  developer Satoshi Nakamoto. The bitcoin network is based on an open source protocol, which makes use of a public transaction log. A master-list of all bitcoin transactions shows who owns what bitcoins currently and in the past, and is maintained by a decentralized network that verifies and timestamps payments. The operators of this network, known as miners, are rewarded with transaction fees and newly minted bitcoins.

As more Bitcoin are mined, increasingly greater amounts of computing power, and thus electricity, are required. The fastest miners on the market now sell for thousands of dollars, on top of whatever electricity costs you have to pay to keep what amounts to a supercomputer running 24/7. So how do you keep those costs in check? According to Business Insider you of course pool your resources and move to Iceland.

At the data centre facility in Reykjanesbær in Southwest Iceland, where you can find the Bitcoin mines, more than houndred whirring silver computers are the laborers of the virtual mines where Bitcoins are unearthed. To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut.

The custom-built computers, securely locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor, are running an open-source Bitcoin program. They perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network. The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years.

Bitcoin-Iceland-Data-Centre-Emmanuel-Abiodun

“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”

Mr. Abiodun was a computer programmer at HSBC in London when he decided to invest in specialized computers that would carry out constant Bitcoin mining. He is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. These entrepreneurs or digital miners believe that Bitcoin will turn into a new, cheaper way of sending money around the world, leaving behind its current status as a largely speculative commodity.

The computers that do the work eat up so much energy that electricity costs can be the deciding factor in profitability. There are Bitcoin mining installations in Hong Kong and Washington State, among other places, but Mr. Abiodun chose Iceland, where geothermal and hydroelectric energy are plentiful and cheap. And the arctic air is free and piped in to cool the machines, which often overheat when they are pushed to the outer limits of their computing capacity. And Mr. Abiodun prides himself on using renewable power.

In just a few months, that installation has generated more than $4 million worth of Bitcoins, at the current value, according to the company’s account on the public Bitcoin network. He is also expanding his Icelandic operation, shipping in about 66 machines that have been running for the last few months near their manufacturer in Ukraine. Mr. Abiodun said that by February, he hopes to have about 15 percent of the entire computing power of the Bitcoin network, significantly more than any other operation.

Verne-Global-data-centre-iceland-low-cost-green-powerToday, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer, the IBM Sequoia, according to calculations done by Michael B. Taylor, a professor at the University of California, San Diego. The computing capacity of the Bitcoin network has grown by around 30,000 percent since the beginning of the year.

Inside the Iceland data center, which also hosts servers for large companies like BMW and is guarded and maintained by the company Verne Global, strapping Icelandic men in black outfits were at work recently setting up the racks for the machines coming from Ukraine. Gazing over his creation, Mr. Abiodun had a look that was somewhere between pride and anxiety, and spoke about the virtues of this Icelandic facility where the power has not gone down once. This is no surprise, as it is a known fact that the Icelandic electricity system is one of the most reliable in the world.