WSHPDR_2013_Final_Report-updated_version

4.2.4 Iceland
Lara Esser, International Center on Small Hydro Power
Key facts
Population 313,183 1
Area 103,000 km 2
Climate
Topography
Rain
pattern
Temperate; mild, windy winters; damp,
cool summers 1
Mostly plateau interspersed with
mountain peaks, icefields; coast deeply
indented by bays and fjords 1
The South Coast receives heavy
precipitation. 2
Electricity sector overview
Nearly all of Iceland’s electricity comes from renewable
sources, such as large hydro and geothermal power
(figure 1). The exceptions are islands Grimsey and Flatey,
which are not connected to the national grid and
continue to use diesel generators. All power stations
with the capacity larger than 1 MW are to be connected
to the national grid. The owners of smaller stations are
also allowed to sell their electricity. 3
Geothermal
26.2%
Hydropow er
73.8%
0% 20% 40% 60% 80%
Figure 1 Electricity generation in Iceland
Source: National Energy Authority 4
In 2003, the Electricity Act brought about major changes
for Iceland’s electricity market, unbundling the market
structure into electricity generation, transmission,
distribution and supply. Iceland has a competitive
market for power generation and supply, while
transmission and distribution are subject to concession
arrangements and specific regulatory oversight by the
National Energy Authority. 5
Small hydropower sector overview and potential
Iceland's precipitation has an enormous energy
potential of up to 220 TWh/year. Much of it is stored in
ice caps and groundwater and dissipated by evaporation,
groundwater flow and glacier flow. A Master Plan for
Hydropower and Geothermal Power was jointly initiated
by the Ministry of Industry and the Ministry for the
Environment in 1997 and was published in 2011. Details
that are available include a hydropower potential in
2010 of 12,592 GWh/year with another 3,326 GWh/year
appropriate for development. 6
There is not much information on installed small
hydropower on Iceland, but it is estimated to be at least
25 MW (figure 2). Landsvirkjun, the largest energy
company in Iceland, operates two small hydropower
plants up to 10 MW: Laxa I (5 MW, generating 3 GWh
per year) and Laxa II (9 MW, generating 78 GWh per
year). 7 Hverfisfljót (3 MW, generating 24 GWh per year)
is a small hydropower plant located in the South East
part of Iceland, Múlavirkjun (6 MW, generating 37 GWh
per year) is located at the East coast of Iceland and
Djúpadalsvirkjun (2 MW, generating 27 GWh per year) is
located in Eyjafjörður in North Iceland. 8 Data on small
hydropower potential is not available.
SHP installed
capacity
SHP potential
n/a
25 MW
0 5 10 15 20 25 30
Figure 2 Small hydropower capacities in Iceland
Renewable energy policy
As all stationary energy use in Iceland is already from
renewable energy, the development of renewable
energy projects is not driven by the need to replace
non-sustainable energy projects that utilize coal and oil,
but to include and enhance sustainability, value creation
and efficiency. 9 A state-owned National Energy Fund
exists, which grants subsidies for measures that aim to
reduce the use of fossil fuels. Among other aims, it
supports the development of domestic energy sources
instead of fossil fuels (Art. 8 Act No. 87/2003). 10
References
1. Central Intelligence Agency (2012). The World
Factbook: Iceland. Available from
www.cia.gov/library/publications/the-world-factbook/.
2. Ingólfsson, O. (2008). The dynamic climate of Iceland.
Available from
https://notendur.hi.is/oi/climate_in_iceland.htm.
Accessed November 2012.
3. Iceland, Orkustofnun National Energy Agency (2012).
Hydro Power Plants in Iceland. Available from
www.nea.is/hydro-power/electric-power/hydro-powerplants/.
Accessed December 2012.
4. Iceland, Orkustofnun National Energy Authority
(2011). Energy Statistics in Iceland in 2011. Reykjavik.
Available from
www.os.is/orkustofnun/utgafa/orkutolur/.
5. Landsnet (2012). Iceland’s Electricity Market.
Available from
www.landsnet.is/index.aspx?GroupId=1089. Accessed
December 2012.
6. Jóhannesson, H. (2012). Master Plan for Energy
Resources in Iceland. Paper presented at IAIA12
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