Electricity sector in Iceland

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Much of electricity in Iceland is generated by hydroelectric power stations. Irafossstod was built in 1953 and is one of Iceland's oldest hydroelectric plants still operating, located just south of Thingvallavatn. Hydro Electric Power Station at Yrufoss - panoramio (1).jpg
Much of electricity in Iceland is generated by hydroelectric power stations. Írafossstöð was built in 1953 and is one of Iceland's oldest hydroelectric plants still operating, located just south of Þingvallavatn.

The electricity sector in Iceland is 99.98% reliant on renewable energy: hydro power, geothermal energy and wind energy. [1]

Contents

Iceland's consumption of electricity per capita was seven times higher than EU 15 average in 2008. The majority of the electricity is sold to industrial users, mainly aluminium smelters and producers of ferroalloy. The aluminum industry in Iceland used up to 70% of produced electricity in 2013. [2]

Landsvirkjun is the country's largest electricity producer. The largest local distribution companies are RARIK, Orkuveita Reykjavíkur and Hitaveita Suðurnesja. Electricity production increased significantly between 2005 and 2008 with the completion of Iceland's largest hydroelectric dam, Kárahnjúkar Hydropower Plant (690MW). [3] Iceland's national electrical grid is owned and run by Landsnet and is composed of 3,000 km of transmission lines and 70 or so substations.

Production and Consumption

Iceland's electricity is produced almost entirely from renewable energy sources: hydroelectric (70%) and geothermal (30%). [4] Less than 0.02% of electricity generated came from fossil fuels (in this case, fuel oil). [4] In 2013 a pilot wind power project was installed by Landsvirkjun, consisting of two 77m high turbines with an output of 1.8MW. [5]

There are plans to increase wind power share in Iceland, with many onshore and offshore wind farm opportunities. [6] According to Statistics Iceland the total electricity consumption was 7,958 GWh in 2002, 11,480 GWh in 2007, and 17,068 GWh in 2012. [7] Electricity production increased by 24 MWh/person from 2005 to 2008, an increase of 83%. [3]

Two remote islands disconnected from the Icelandic grid rely on diesel generators, Grímsey and Flatey.

Iceland electricity production by source Iceland electricity production.svg
Iceland electricity production by source
Installed Electrical Capacity and Production in Iceland (2020) [1]
SourceInstalled CapacityProduction
kW %MWh %
Hydroelectric 2,106,93471.77%13,156,97268.79%
Geothermal 755,04025.72%5,960,60231.16%
Wind 1,8000.06%6,6600.03%
Fuel 71,9712.45%3,0670.02%
Total2,935,745100%19,127,302100%

Transmission

220kV transmission lines in the vicinity of Reykjavik Six-Armed Giants (4296044242).jpg
220kV transmission lines in the vicinity of Reykjavík

The Icelandic Transmission System Operator (TSO) is Landsnet, a company jointly owned by three state-owned power companies: RARIK, Landsvirkjun and Orkubú Vestfjarða. The Icelandic TSO is compensated for all transmission costs by retail and wholesale distributors. [8] Landsnet's transmission network operates at voltages of 220kV, 132kV and a few 66kV lines and serves the whole country and is composed of 3,000 km of transmission lines and around 70 substations.

Connection to the rest of Europe

Former map of existing and planned HVDC interconnectors in Europe in 2012, Icelink labelled as number 1. HVDC Europe annotated 2012.svg
Former map of existing and planned HVDC interconnectors in Europe in 2012, Icelink labelled as number 1.

There are plans to connect the Icelandic grid with the UK using a subsea High-Voltage DC (HVDC) interconnector, with a potential capacity of up to 1.2GW, called Icelink. It would be the world's longest submarine HVDC cable, if built. This would allow Iceland to export excess energy to UK and in turn linking it to a wider European super grid. The project is in planning stages and is controversial in Iceland due to fears of increased domestic electricity prices as well as environmental damage from the resulting increase in power plants. [9]

In the 2019 UK General Election 2019, the Democratic Unionist Party included in their manifesto a version of Icelink in which Iceland would instead be connected to Northern Ireland. [10]

Iceland is active with the sale of Certificates of Origin in Europe. On 27th of April 2023 the Association of Issuing Bodies (AIB) suspended the export of Guarantees of Origin (GO) from Iceland due to the suspect of possible double counting. [11] As of today this ban has been lifted. [12]


Distribution

Electricity distribution is controlled by the following local utilities with local monopolies: [13]

Competition

The Icelandic electricity market is geographically isolated. The market was closed for competition prior to 1 July 2003. Almost all electricity was supplied by Landsvirkjun and sold through regional distribution companies. Landsvirkjun had a monopoly position on investment in generation. Full market opening began in 2006 e.g. with the opportunity to switch supplier. Contracts for large scale energy users were in general long term, up to 30 years with options for extension. [8]

Landsvirkjun, the largest electricity producer, had 76% annual production in 2007.The majority of the electricity is used in industry, mainly aluminium smelters and producers of ferroalloy. Landsvirkjun does not participate directly in the retail market for households and smaller businesses.

In the retail market the main companies are RARIK, Orkuveita Reykjavíkur and Hitaveita Suðurnesja.The last two have also entered into the market for energy intensive users. The households heated with electricity, not many, receive subsidies to make their heating costs comparable to hot water heating. [8]

Orkusalan was established as a joint venture between Landsvirkjun, and two large operators. The companies involved produced the majority of all electricity and own about 98 percent of the hydro power generation. The joint venture would have provided about 40 percent of the household electricity. According to the Icelandic Competition Authority the joint venture would have strengthen a dominant position of Landsvirkjun. The parties suggested that Landsvirkjun would pull out of the project, and subject to that condition the merger was allowed to proceed. Orkusalan commenced operation without Orkubu Vestfjarða. The later development should be updated. [8]

As of 2022, new retail resellers of electricity have come to market such as N1 Rafmagn, Straumlind and Orka Heimilanna. They have wholesale agreements to resell electricity mostly from Landsvirkjun. [14]

See also

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References

  1. 1 2 Installed electrical capacity and electricity production in Icelandic power stations 2020 (PDF). Orkustofnun Data Repository (Report). Iceland Energy Authority. OS-2021-T014-01.
  2. ↑ "Electricity Generation". Orkustofnun (National Energy Authority, Iceland). Archived from the original on 7 January 2019. Retrieved 12 December 2023.
  3. 1 2 Energy in Sweden, Facts and figures Energiläget i siffror, The Swedish Energy Agency, Specific electricity production per inhabitant with breakdown by power source, (kWh/person) Source: IEA/OECD 2006 T23 Archived July 4, 2011, at the Wayback Machine , 2007 T25 Archived July 4, 2011, at the Wayback Machine , 2008 T26 Archived July 4, 2011, at the Wayback Machine 2009 T25 Archived January 20, 2011, at the Wayback Machine and 2010 T49 Archived October 16, 2013, at the Wayback Machine
  4. 1 2 Statistics Iceland.[www.statice.is/?PageID=1230&src=]
  5. ↑ "Hafið - Orka úr 100% endurnýjanlegum orkugjöfum". www.landsvirkjun.is (in Icelandic). Retrieved 1 March 2022.
  6. ↑ arnarph (5 May 2017). "Yfir 100 vindmyllur og 300 megavött". RÚV (in Icelandic). Retrieved 1 March 2022.
  7. ↑ Statistics Iceland
  8. 1 2 3 4 Capacity for Competition, Investing for an Efficient Nordic Electricity Market Report Archived 2010-11-26 at the Wayback Machine , The Nordic competition authorities 1/2007
  9. ↑ "Ákvörðun um sæstreng þarf að koma á næsta ári". www.mbl.is (in Icelandic). Retrieved 1 March 2022.
  10. ↑ "Election 2019: Digging into NI parties' manifestos". BBC News. 7 December 2019. Retrieved 28 April 2022.
  11. ↑ "Press release – 27 April 2023 - Regarding the compliance assessment of Landsnet's possible breach of EECS Rules N9.1.1, A2.1.2, C3.3.1 and E3.3.14" (PDF). www.aib-net.org/. Retrieved 5 October 2024.
  12. ↑ "Assessment of Potential Double Counting of Guarantees of Origin in Iceland". landsnet.is/. Retrieved 5 October 2024.
  13. ↑ "Almennir kaupendur raforku". Orkustofnun (in Icelandic). Retrieved 1 March 2022.
  14. ↑ "Rafmagn". Aurbjörg.is (in Icelandic). Retrieved 6 August 2022.
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