Energy

Iceland has extensive hydro and geothermal resources and is the only country in Western Europe that still has large-scale, competitively priced power remaining to be harnessed from such sources. Electricity consumption per capita is the highest in the world, at some 38,000kWh per capita in 2007. Even so, only roughly one-third of the energy potential for generating electricity had been tapped in 2008. In no other country is a greater proportion of energy supplied from renewable sources.

Electric power potential from hydro and geothermal sources now estimated at 50 thousand GWh/year (50 TWh), taking into account feasibility and environmental considerations. Commonly quoted estimates are 25 TWh per year for hydropower potential and 25 TWh per year from geothermal resources. Only 10,000 GWh/year of this power was harnessed in 2006.

In 2007, total installed hydropower was 1,758 MW in 52 power plants with a combined capacity of nearly 12,000 GWh per year (70% of generated electricity). As of August 2008, installed geothermal power in seven steam turbine plants amounted to 485 MW, or 3,880 GWh/year. In 2008, the largest single hydropower plant has an installed power capacity of 690 MW and the largest geothermal plant 210 MW.

Iceland is a world leader in the use of geothermal energy for domestic and industrial purposes other than generating electricity. Over 90% of all homes are heated by geothermal energy, some 12% of the comparable cost of fossil fuels. The current utilisation of geothermal energy for heating and other industrial and commercial uses is considered to be only a small fraction of what this resource can sustain.

Five large-scale power stations have been under construction or expansion in recent years, and three will reach full production in 2008. Total production will be boosted by 780 MW, from 1,590 MW in 2006 to 2,371 MW in 2008. Of this increase, 690 MW comes from hydro sources and 90 MW from geothermal sources. Further projects – both hydro and geothermal plants with total capacity of up to 760 MW are in the planning stage or under consideration.

Of the main producers, Landsvirkjun (the National Power Company) is wholly owned by the Icelandic state, while Reykjavík Energy is owned by City of Reykjavík and Suðurnes Heating is jointly owned by local municipalities in Southwest Iceland, Reykjavík Energy, and private investment company. Iceland has implemented deregulation under an EU directive relating to the separation of transmission, generation, distribution and sales of electricity. New legislation does not call for incorporation of the power companies or any changes with regard to the state and/or municipal guarantees they currently enjoy.

Economy of Iceland,Central Bank of Iceland