Main Industries and Services
Energy production and related industries & services play a very important role in Iceland’s economy.
Renewable energy sources (hydro and geothermal) provide 100% of Iceland’s electricity needs. In fact, the Icelandic hydro- and geothermal power sector generate more electricity per capita than any other country in the world.
Furthermore, geothermal district heating provides almost 90% of Iceland’s heating needs. It is therefore not surprising that Iceland has a strong energy industry and highly qualified energy related services. There is also a small but growing green fuel energy sector.
The state owned company Landsvirkjun is by far the largest power producer, with the municipally owned Orkuveita Reykjavikur in second place. More information about the energy industry in Iceland can be found here. Also, there are special pages about the green fuel sector and upcoming hydrocarbon industry.
Iceland’s competitively priced electricity has led to a very strong growth of power-intensive industries. Today manufacturing products account for close to 55% of the total exports from Iceland (in fob-value). The largest proportion of these exports is aluminum (40% of total exports), which is produced in large smelters by harnessing Icelandic renewable energy. Another important energy-intensive industry is production of ferrosilicon.
For decades, marine products accounted for 50-70% of all exports. However, due to fast growing aluminum industry the share of marine products are now below 40%. This means that industrial manufacturing products now have become the largest part of Icelandic exports.
Manufacturing industries, with the exception of aluminum production, are fairly small-scale and mostly geared to the domestic Icelandic market. In recent years, however, new energy related industries and services have started to see Iceland as an attractive location. Examples are foils production for electrolytic capacitors and data centers. With new subsea telecom cable connections, Iceland’s cool weather and very competitive prices for electricity, Iceland is becoming an ideal location for this type of services. It is not unlikely that data centers will grow quickly as an industry in Iceland in the near future.
The rapid development within the energy and industrial sectors in Iceland in the last 15 years has led to the foundation of robust engineering, technical and software development firms. Some of those companies not only offer their services in Iceland but have also expanded abroad. You can read more about Icelandic engineering here.