More Green Energy Needed

Gunnar Guðni Tómasson, EVP Hydropower.
Gunnar Guðni Tómasson, EVP Hydropower.

Demand for electricity has never been higher in Iceland. This is good news for Landsvirkjun, of course, as its main purpose is selling electricity. Furthermore, this high demand reflects favourable conditions for Landsvirkjun‘s large customers. These large customers are producing more than ever, for premium markets. This demand is also a sign of vitality and general prosperity in the country. Now, however, Landsvirkjun barely has the capacity to supply all electricity needed, not to mention embracing new opportunities.

Landsvirkjun operates the largest electricity generating system in Iceland and produces over 70% of all electricity sold in the country. The electricity generating system consists of 15 hydro power stations, three geothermal power stations and two windmill turbines. The gross installed capacity is approximately 2150 MW, of which approximately 2000 MW derive from hydro energy.

Part of this power supply is reserved as power reserves and regulating power in accordance with agreements with Landsnet, the transmission system operator, which is responsible for providing secure supply of electricity. In addition, a small part of the power supply is generally reserved for regular maintenance at Landsvirkjun’s power stations. The remaining power is available to generate electricity and meet demand from Landsvirkjun’s customers.

Unprecedented Energy Generation

Landsvirkjun’s electricity generating system has been under a severe pressure lately. In recent weeks, total capacity has been topped, repeatedly. On 11 November 2021 the electricity production went over 1869 MW for the first time, and on 30 November a new record was made when the production reached a total of 1890 MW.

Under such circumstances, available power in Landsvirkjun’s generating system becomes scarce and can even be exhausted. This applies particularly to the Southwest, which has the highest energy consumption. Furthermore, the water level in reservoirs is rather low at the moment, especially in the South, and due to transmission restrictions between parts of Iceland, the coordination of Landsvirkjun’s reservoirs is limited to a certain degree, which impacts the whole electricity generating system. Therefore, Landsvirkjun has transmitted as much electricity as possible to the Southwest, but the transmission system is a limiting factor.

Enviable Position

Landsvirkjun struggles to meet demand for green, clean energy, and there is no indication of decreasing demand. On the contrary, as in addition to meet the demand of Landsvirkjun’s current customers, a plan is needed for the energy transition and various green opportunities that are knocking, all of which call for more supply of electricity.

This is an enviable position to be in, here in the country of renewable energy. On the other hand, it is obvious that energy and power for the electricity generating system will only be made available by constructing new power plants or extending the existing ones. Both options entail a long and complicated process, which takes at least a few years to prepare and execute, in some instances even decades.

Landsvirkjun operates its electricity generating system to deliver energy to its customers in accordance with agreements. Currently, there is no free energy in the Company’s electricity generating system. It must be emphasized that it is not only Landsvirkjun´s responsibility to figure out how to meet the increased demand for electricity, as the interplay of total supply and demand on the electricity market at any given time involves securing energy supply, which is the responsibility of the government.