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Iceland – renewables as a national project

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Iceland's Hellisheiðarvirkjun is the second largest geothermal power station in the world. © Jesús Rodríguez Fernández / Flickr / Creative CommonsIceland’s Hellisheiðarvirkjun is the second largest geothermal power station in the world. © Jesús Rodríguez Fernández / Flickr / Creative Commons

The imminent threat of climate change has governments around the world attempting to set targets for increased energy efficiency, energy saving and the transition from fossil fuels to fuels with a low carbon footprint. GUÐNI JÓHANNESSON notes that Iceland’s provision of one hundred per cent of space heating and electricity through hydropower and geothermal energy was not an accident of nature, but a national goal. This article originally appeared in The Circle 03.15.

IT IS TRUE that Iceland has abundant resources in hydropower and geothermal energy but so have many other countries. The difference is that development of Iceland’s renewable resources occurred through publicly financed initial research and development. This was followed by the introduction of renewables on a large scale supported by a strong national policy to create necessary market conditions and a viable business environment. It was recognized that factors such as energy security, lower pollution and CO2 emissions plus long term impact on the balance of trade must be given a price tag for the transition to take place.

In Iceland, extensive research was carried out with government support in order to identify and develop new geothermal sources. The first projects were usually in areas where geothermal sources were obvious and in the vicinity of populated areas. A brilliant move by the government in the 1930s also saw the building of new centres for education and regional services close to known geothermal sources. A considerable development of greenhouses owned by private entrepreneurs was also fostered where geothermal water was available.

In the 1960s about forty per cent of space heating was geothermal energy, with the remainder provided mainly by oil. A search for sourceswhere little or no surface indications were available had to take place. Since district heating systems in smaller communities and less densely populated areas would be more difficult to finance with sales revenues, state aid at that time included a risk mitigation fund sharing the risk for drilling and direct support for the build up of district heating in remote areas.

In places where geothermal energy was yet to be found, district heating systems running on low priority electricity in combination with oil were built. However, many houses in the sixties were built with direct electrical heating which made it less lucrative for these homeowners to convert to district heating than for those who had an oil burner with a hydronic heating system which uses water or another liquid heat transfer medium. The government also guaranteed loans in US dollars which enhanced the investments but put a heavy strain on the economy of the district heating companies when the Icelandic currency was devalued.

The district heating companies are in most cases owned by municipalities and run on a cost plus basis as a service to the inhabitants. This means that as the financing has been paid off over time and since operational costs are low, the cost for heating can be down to 1-2 US cents per kWh. This makes a huge difference in the cost of living in a country with heating demands over the entire year.

Generating electricity with geothermal energy has increased significantly in recent years. As a result of a rapid expansion in Iceland’s energy intensive industry, the demand for electricity has increased considerably. The figure shows the development from 1970-2013. The installed generation capacity of geothermal power plants totaled 665 MWe (megawatt electric, the electric output of a power plant in megawatts) in 2013 and the production was 4,600 GWh, or 24.5% of the country’s total electricity production. The construction and operation of the power plant Krafla was challenging due to difficult chemistry and volcanic activity in the region. However, once technical problems were overcome and operation secured, geothermal resources developed rapidly in the late 1990s.

The Iceland Deep Drilling Project (IDDP) is a long term study of hightemperature hydrothermal systems in Iceland. It is a collaborative effort by a consortium of Icelandic power companies and the Icelandic government to determine whether geothermal fluids would improve the economics of power production from geothermal fields. Over the next several years the IDDP expects to drill and test a series of boreholes beneath three currently exploited geothermal fields in Iceland. This will require drilling to a depth of about 5 km in order to reach hydrothermal fluids at temperatures ranging from 450°C to ~600°C.

Further outreach includes the Geothermal Training Programme of the United Nations University (UNU-GTP), established in Iceland in 1978 when Orkustofnun – the National Energy Authority of Iceland – became an Associated Institution of the UNU. Since 1979, a group of professional scientists and engineers from the developing and transitional countries have come to Iceland annually to spend six months on highly specialized studies, research, and on-the-job training in geothermal science and engineering.

DR. GUÐNI A. JÓHANNESSON is the Director General of Iceland’s National Energy Authority.

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