The electricity sector in Iceland

Iceland

Iceland , described as the Republic of Iceland, is a Nordic and European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. Iceland also refers to the main island of the country, which contains almost all the population and almost all the land area. The country has a population...

relies on renewable energy

Renewable energy

Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...

: hydro power, geothermal energy and thermal power. Iceland’s consumption of electricity was seven times higher than EU 15 average in 2008. The majority of the electricity is sold to industrial users, mainly aluminium

Aluminium

Aluminium or aluminum is a silvery white member of the boron group of chemical elements. It has the symbol Al, and its atomic number is 13. It is not soluble in water under normal circumstances....

 smelters and producers of ferroalloy

Ferroalloy

Ferroalloy refers to various alloys of iron with a high proportion of one or more other element, manganese or silicon for example. It is used in the production of steels and alloys as a raw material.The main ferroalloys are:*FeAl – ferroaluminum...

. Landsvirkjun

Landsvirkjun

Landsvirkjun is the largest energy producer in Iceland. It was founded in 1965 by the city of Reykjavík and the state of Iceland. Its general purpose is to produce and provide electricity for heavy industry and to sell electricity to local providers around Iceland...

 is the largest electricity producer. In the retail market largest companies were in 2007: RARIK, Orkuveita Reykjavíkur

Orkuveita Reykjavíkur

Orkuveita Reykjavíkur is an Icelandic utility company that provides electricity, geothermal water for heating, and cold water for consumption and fire fighting. It also operates a data-utility network and waste-treatment facilities. The company's service area extends to 20 communities in the...

 and Hitaveita Suðurnesja. The electricity production was increased significantly between 2005-2008.

Consumption

According to the Nordel Annual Statistics the total electricity consumption was 8,028 GWh in 2001 and 9,925 GWh in 2006.

The electricity supply and consumption were equal in 2008: 53.1 MWh per inhabitant when he European union (EU15) average was 7.4 MWh. Iceland’s consumption of electricity was seven times higher than EU 15 average in 2008. The domestic electricity supply promotes use of electricity.

Production

The electricity is produced in Iceland with renewable energy only. In 2009 there was no wind power

Wind power

Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....

 in Iceland. Electricity production increased 24 MWh/person from 2005 to 2008 that is 83 %.

Electricity pro person and by power source

Electricity pro person in Iceland (kWh/ hab.)
	Use	Production	Import	Import %	Fossil	Nuclear Nuclear power Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...	Nuc. Nuclear power Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...  %	Other RE Renewable energy Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...	Bio Biomass Biomass, as a renewable energy source, is biological material from living, or recently living organisms. As an energy source, biomass can either be used directly, or converted into other energy products such as biofuel.... +waste	Wind	Non RE Renewable energy Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...  use*	RE Renewable energy Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...  %
2004	29,724	29,724	0	0 %	34	0	0 %	29,690	0	0	34	99.9 %
2005	28,967	28,967	0	0 %	33	0	0 %	28,933	0	0	33	99.9 %
2006	39,900	39,900	0	0 %	0	0	0 %	39,900	0	0	0	100 %
2008	53,129	53,129	0	0 %	0	0	0 %	53,129	0	0	0	100 %
2009	52,625	52,625	0	0 %	0	0	0 %	52,813	0	0	0	100 %
* Other RE Renewable energy Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...  is waterpower, solar and geothermal electricity Geothermal electricity Geothermal electricity is electricity generated from geothermal energy.Technologies in use include dry steam power plants, flash steam power plants and binary cycle power plants...  and windpower until 2008 * Non RE use = use – production of renewable electricity RE % = (production of RE / use) * 100 % Note: The European Union Renewable energy in the European Union The countries of the European Union are currently the number two global leaders in the development and application of renewable energy. Promoting the use of renewable energy sources is important both to the reduction of the EU's dependence on foreign energy imports, and in meeting targets to combat...  calculates the share of renewable energies in gross electrical consumption.

Mode of production

The total installed power capacity was in 2001 1,427 MW and in the end of 2006 1,707 MW including hydro power 1,162 MW; geothermal power 432 MW and thermal power 113 MW.

Transmission

The Icelandic Transmission System Operator (TSO) is Landsnet, a company jointly owned by three state-owned power companies: RARIK, Landsvirkjun and Orkubu Vestfjarða. All major transmission construction needs a special permission from the Ministry. The Icelandic TSO is compensated for all costs.

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

Landsvirkjun

Landsvirkjun is the largest energy producer in Iceland. It was founded in 1965 by the city of Reykjavík and the state of Iceland. Its general purpose is to produce and provide electricity for heavy industry and to sell electricity to local providers around Iceland...

 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.

Landsvirkjun, the largest electricity producer, had 76 % annual production in 2007.The majority of the electricity is used in industry, mainly aluminium

Aluminium

Aluminium or aluminum is a silvery white member of the boron group of chemical elements. It has the symbol Al, and its atomic number is 13. It is not soluble in water under normal circumstances....

 smelters and producers of ferroalloy

Ferroalloy

Ferroalloy refers to various alloys of iron with a high proportion of one or more other element, manganese or silicon for example. It is used in the production of steels and alloys as a raw material.The main ferroalloys are:*FeAl – ferroaluminum...

. 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

Orkuveita Reykjavíkur

Orkuveita Reykjavíkur is an Icelandic utility company that provides electricity, geothermal water for heating, and cold water for consumption and fire fighting. It also operates a data-utility network and waste-treatment facilities. The company's service area extends to 20 communities in the...

 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.

Orkusalan was established as a joint venture between Landsvirkjun, and two large operators. The companies involved produced the majority of all electricity and own ca 98 per cent of the hydro power generation. The joint venture would have provided ca 40 per cent 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 developmet should be updated.