Regulatory Environment for Wind Power Must Be Simplified

Einar Mathiesen, EVP Wind- and Geothermal Power, Landsvirkjun

Wind turbines have certainly benefited from a tailwind in recent years. However, the technology is by no means a new one, as for over 2000 years wind turbines have been milling corn and grain, forging iron, and irrigating cultivation areas. Fossil fuels have reigned supreme since the Industrial Revolution, but in recent years wind power has become a realistic option in energy management all over the world, as global demand for renewable energy sources has risen sharply. Technological advances have made this option feasible, and many factors have made it more economical than before. Wind power has played a major role in the current global energy transition.

Perfect Conditions in Iceland

Iceland offers ideal conditions for wind turbines, compared to most other parts of the world. Calm weather conditions are almost newsworthy, and the infrastructure of the electric power system is perfectly aligned for the addition of a new energy source, such as wind power. As we all know, hydroelectric power is the main energy source in Iceland, as it provides a stable and predictable energy supply. Landsvirkjun‘s research in recent years at the lava field Hafið near the Búrfell Mountain, has presented the interesting fact that during winter, when the water level in the reservoirs is at its lowest, the efficiency of wind turbines is at its peak. Furthermore, Landsvirkjun‘s wind turbines have a capacity factor of 42%, compared to a capacity factor of 25% in England.

However, wind power has its faults. Wind power is not stable, as occasionally there are days with long awaited calm weather conditions. On the other hand, wind power is much more stable in Iceland, compared to other countries. The visual impact of wind turbines on the environment is unequivocal, as well as the noise pollution in its surroundings. On the other hand, when removed, a wind turbine leaves almost no trace.

Nought Wind Power Stations in Operation

A wind farm is not operated within the Icelandic electric system. In the Framework Programme’s fourth phase, the steering committee presented a report in April, proposing three wind power stations to be put in the utilisation category, and two wind power stations to be put in the waiting category, out of 34 applicants. Of these three choices, two have since been rejected by the respective municipalities.

Landsvirkjun has high hopes that in the future wind power will be the third pillar in the Company‘s electric power system, along with hydroelectric power and geothermal energy. Landsvirkjun is developing two wind power stations: the Blanda Wind Power Station and the redesigned Búrfell Wind Power Station. The focus has been on reducing any negative impact on the environment for these two viable options, which offer a strategic addition to the electric system by giving it a splendid support.

The energy transition calls for action. In order to reach the Government‘s goal for energy transition in road transport by 2030, pursuant to the Paris Agreement, an extra 300 MW energy production will be needed, according to analysis made by the Federation of Energy and Utility Companies in Iceland (Samorka). Meanwhile, investment of approximately ISK 15 billion is needed in the transmission- and distribution grid. In return, there will be an annual ISK 20 to 30 billion savings on foreign currency due to lower fossil fuel imports. In accordance with the Paris Agreement, two out of three cars must be EVs (electric vehicles) before 2030, but it is estimated that the annual savings for the average household, by driving an EV and not purchasing fossil fuels, is ISK 400.000.

If the bar is set higher and the path taken to a full energy transition in the passenger car fleet by 2030, an extra 600 MW energy production will be needed to the current energy production system. Now, if the objective is full energy transition, or completely exchanging fossil fuels for a clean and domestic energy source for local cars, ships, and airplanes, an extra 1200 MW of energy production will be needed, in addition to the current total energy production.

Uncertainty About the Licensing Process

Certainly, success at this level cannot be attained within the present law and regulatory environment. It is necessary to ensure that the licensing process is routine, unlike how it has been in recent years. It is safe to say that the process of the Framework Programme has failed for the last few years. The steering committee started working on the third phase in March 2013, more than eight years ago, and delivered its findings three years later. Its proposal never went through Parliament. Nor did the proposal for the fourth phase, which was delivered by the steering committee last March, based on work over three years.

Furthermore, a bi-partisan report, under the aegis of the Minister for the Environment and Natural Resources, on plans for establishing a national park in the central highland of Iceland, has meant great uncertainty regarding the infrastructure and development of energy options in Iceland. Plans for establishing a national park will greatly impact possibilities for further utilising hydroelectric power, geothermal energy, and wind power.

It is also worth mentioning that the Minister for the Environment and Natural Resources commissioned the Icelandic National Planning Agency (Skipulagsstofnun) to start working on new initiatives and development for the National Planning Strategy for 2015-2026. The proposal was submitted as a Parliamentary Resolution to Alþingi last spring and sent to the Environment and Communications Committee. The proposal assumes that planning authorities enforce policies on climate, landscape, and public health in its planning strategies. This will impact the Regional Development Policy, the National Planning Strategy, the Framework Programme, and the Transportation Policy Plan, to name but a few.

Framework Programme Not Practical for Wind Power

Last spring, a bill was submitted to the Parliament, proposing an amendment to the Master Plan Act (Act No. 48/2011), regarding the process of law on power plant options for wind power. According to the amendment, it is assumed that the procedure regarding wind power stations continuous to be within the Framework Programme, but in a different format. However, Landsvirkjun strongly recommends that the development and utilisation of wind power will, under no circumstances, fall under the Master Plan Act, and when a decision is made on the location of wind turbines, the power of decision will rest at the respective municipalities, in accordance with the Planning Law. Laws on nature preservation are practical for giving precise instructions on which areas are not suitable for developing wind power stations regarding environmental considerations, e.g., heritage preservation or water protection. The Government‘s general strategy for this policy area belongs to the National Planning Strategy, as mentioned earlier.

It is urgent to ease the uncertainty regarding the licencing process for wind power stations if the increased demand for electricity is to be met with this efficient power plant option. Irrespective of the Government‘s good intentions, the process of the Framework Programme is not practical for dispensing wind power options. Furthermore, the bill, which is intended to amend the laws on the process of wind power options will not simplify the regulatory environment. Thus, it is imperative to formulate a fresh and straightforward approach to ensure that the licencing process takes no longer than 12 months.

Einar Mathiesen, EVP Wind- and Geothermal Power, Landsvirkjun