The advisory group on the sub-sea cable electricity cable to Europe have handed over their findings and recommendations to the Minister of Industries and Innovation. The recommendations of the advisory group are a significant milestone for Landsvirkjun as it continues to assess the feasibility of connecting to the European electricity market via sub-sea cable. Landsvirkjun has always highlighted the necessity of a broad consensus for any such large- scale projects and is particularly pleased with the unity of the advisory group and their unanimous decisions.
The report shows that there are indications that a sub-sea cable between Iceland and the UK could prove macro-economically profitable if certain conditions were to be fulfilled i.e. if negotiations with the counterparties should prove successful, procuring favourable energy prices and secure long term contracts.
The advisory group was unanimous in its opinion that work should continue on mapping out the various aspects of the project domestically whilst concurrently seeking out answers on potential operational and ownership models from the counterparties in the UK.
Landsvirkjun has been involved in the process of assessing the possibility of a sub-sea cable for some time and has introduced the results of their preliminary findings at the Annual and Autumn Meetings. Connecting with an electricity market like the UK market could provide Iceland with a unique opportunity to maximise the return from the country’s natural resources. Surplus energy already within the system and presently unutilised by industry could be sold, further energy generation methods could be introduced, the flexibility of hydropower could be better utilised, risk distribution could be increased and Iceland’s energy supply security could be increased by opening up the presently isolated system. A number of new and exciting employment opportunities could become a reality and the value created by such a project could be significant.
Alongside its call for a broad consensus on such a project Landsvirkjun has also emphasised the importance of two key issues should the project become a reality. Firstly, that energy intensive industries should be ensured on-going competitive terms on electricity supply in order to encourage the growth of these industries in Iceland and secondly, the assurance that domestic electricity prices will not rise significantly. There is no risk of domestic electricity prices multiplying as some predictions have shown and the prices elsewhere in Europe are not that much higher than domestic prices in Iceland. The Norwegians have set a successful precedent for achieving the consensus of stakeholders whilst utilising the opportunity to sell electricity to the European market. This has been done without threatening the existence of industry within Norway.
The Minister of Industries and Innovation will assess the recommendations of the advisory group and come to a decision as to the next step. The Icelandic Government must also decide its position on the matter. Landsvirkjun estimates that the preliminary findings will be released by the end of this year and will be ready to take the next step. This will include a decision on if and when it should begin expensive and extensive research on the project. The decision to construct a sub-sea electricity cable would therefore only be possible after a number of years and it is important that any such decision should be reached with the broad consensus of society.
The article was published in the Icelandic newspaper Fréttablaðið on June 29th 2013.