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The Blue Lagoon is one of Iceland's most famous tourist attractions. (Photograph by Paul Gipe)

Iceland’s Renewable Energy Drive is Full-Steam Ahead

Iceland is famous for its breathtaking scenery, its geysers, its Blue Lagoon—and for using its abundant renewable energy, and especially for tapping the volcanic roots of the island in developing its geothermal resources.

Iceland today generates 100 percent of its electricity with renewables: 75 percent of that from large hydro, and 25 percent from geothermal. Equally significant, Iceland provides 87 percent of its demand for hot water and heat with geothermal energy, primarily through an extensive district heating system.

Altogether, hydro and geothermal sources meet 81 percent of Iceland’s primary energy requirements for electricity, heat, and transportation. Iceland has profited by using  the low cost of its renewably generated electricity—and  the stable price it represents over the long term—to lure a large aluminum smelting industry to the island.

Geothermal Leader

Despite its economic collapse in 2008, Iceland still has one of the world’s highest standards of living.

The 100,000-square-kilometer island  is geologically active; half of the country lies on the North American tectonic plate, the other half  on the Eurasian plate.

Two-thirds of its 300,000 people live in the capital Reykjavik. Until the extensive development of the island’s hydro and geothermal resources, the country was dependent upon coal and oil for providing transportation, fueling its fishing fleet, and heating its homes. The latter is not something to take lightly in a nation just south of the Arctic Circle. Iceland’s older residents can remember a time when coal smoke, not steam from the island’s famed fumaroles, shrouded the capital.

But within one generation, following the oil crises of the 1970s, Iceland moved almost completely from heating with fossil fuels to geothermal energy.

Iceland is now a leader in geothermal development and exports its technical expertise worldwide. Along with the Philippines and El Salvador, it can boast  the highest penetration of geothermal energy in electricity generation worldwide.

Travelers  through Iceland may know nothing about the country’s geothermal resources, but as their flight arrives atKeflavik International Airport they may look askance at their seatmates. The airport sits near the end of the Reykjanes peninsula, one of the geothermal fields serving the capital. A rotten-egg smell characteristic of hot springs and underground steam fields pervades the air.

Steam plumes rise from fumaroles and vents along the road on the hour drive from the airport to Reykjavik.

Icelanders use geothermal energy both for generating electricity, and for heating. They generate electricity in what is, for all practical purposes, conventional thermal power plants. Instead of burning coal in a boiler to create steam, Icelanders use steam directly from the earth.

Only minutes from the international airport at Keflavik is the Blue Lagoon, a posh spa built on the waste fluids from Svartsengi geothermal power plant.

Originally the Svartsengi site was developed to heat the nearby harbor town of Grindavik after the oil crisis, but geologists found a much greater resource than expected and the plant has steadily grown, now producing 75 MW of electricity from 12 wells. Svartsengi also produces an equivalent amount of thermal fluids for district heating.

HS Orka, the company that operates the plant, pumps the waste geothermal fluids back in into 12 recharge wells, and of course, feeds some of the waste geothermal fluids to the popular Blue Lagoon.

The evaporation pond of the Blue Lagoon has become the pearl of Iceland, receiving some 500,000 visitors per year.

What is most striking to an American visitor is the appearance of the plants.

Iceland takes architecture seriously. And this is evident in the most utilitarian of structures, their power plants.

Both Svartsengi and the nearby Reykanes plant are stunning examples of modern industrial architecture. Rather than being blots on the landscape, they are literally shining examples that Iceland takes renewable energy and its place in the landscape seriously. It’s a lesson that power-plant developers should take to heart outside Iceland.

Iceland has achieved even greater success with using geothermal energy for heating.

In 1933, only 3 percent  of Reykjavik’s population was served by a district heating system. Nearly everyone used coal to heat, and the sky was black as a result.

By the 1960s, half of the city was heated by oil and the population was vulnerable when the oil crises hit in the 1970s.

Following the first oil crisis, most buildings were switched to the district heating system. One unexpected benefit was a dramatic drop in emissions. The fall in emissions continued into the 1990s as more of the city, and even rural areas converted to geothermal heating.

Now, no other city has developed district heating on the scale of Reykjavik. As a result, city residents benefit from low-cost heat at a stable price not dependent upon the volatility in the price of fossil fuels. The cost of heating in Reykjavik is one-fourth that of heating across the North Sea, in Copenhagen. Of the geothermal fluids used for heating, 85 percent  is used to heat buildings and the remainder for domestic hot water. The volume of geothermal fluids used for heating has steadily decreased since the 1980s as Iceland tightens up building insulation standards. Like their counterparts at HS Orka, the municipal utility Orkuveita Reykjavikur takes the architectural appearance of its well sites and power plants seriously. Only a well-trained eye can detect a faint wisp of steam from its stainless-steel well enclosures in the Laugardalur hotel district.

Powerhouse for Britain?

Iceland not only points to its success in meeting its own needs with renewables but also aggressively markets its renewable resources to energy-intensive industries. Now it wants to go even further—specifically, to the British Isles.

In an ambitious—some might say foolhardy—move, Iceland has injected itself into Britain’s electricity market reform debate by proposing an unprecedented 700mile sub-sea cable to Scotland. The $2 billion project would carry 5 TWh of Iceland’s renewable electricity to Britain’s energy market, reports Bloomberg. That’s a third more electricity than produced in all of Iceland today and as much as all the currently developed geothermal on the island.

It’s also roughly equivalent to the output of a typical nuclear reactor.

Whether such a project is technically feasible or economically viable remains to be seen. Iceland certainly has the untapped geothermal potential to do so. But it’s an open question as to whether geothermal resources developed in Iceland and transmitted such a long distance would be cheaper than if Britain developed its own geothermal resources.

And if Britain launches its electricity reform as planned, what would be the “strike price” of Icelandic geothermal energy delivered to Britain? Would it be cheaper than new nuclear? Regardless of whether such a mega-project is feasible or whether Iceland’s citizens would be willing to tolerate the financial risk of developing the project after all they’ve lost in the country’s banking boondoggle, Iceland remains a model of what can be accomplished with renewable energy both in electricity generation—and equally as important in heating—when a nation puts its mind to it.

This post is an edited version of the original, which appeared  here.