Concerted Efforts to Increase Energy Generation

Projected energy demand in Iceland until 2035 from Landsvirkjun and Landsnet, the Icelandic TSO, are harmonious. Landsvirkjun expects an increase in demand by 6.5 TWh during that time, with the current annual energy use of approximately 21 TWh. Furthermore, Landsvirkjun energy demand projections that go further than 2035 are in concordance with projects from Samorka, the Federation of Energy and Utility Companies in Iceland, and Landsnet. However, uncertainty increases with longer-term projections. The problem is that supply will not increase significantly in the coming years, and energy security for households and smaller companies could be volatile in 2024-28. After that, new power stations will hopefully have started energy generation. The Búrfellslundur Wind Farm is planned to commence operations in the last quarter of 2026, the Hvammsvirkjun Power Station in 2028, and the extension of Þeistareykir Geothermal Power Station will be finished around that time. Other energy companies must also be thinking along the lines of increasing generation.

Landsvirkjun has repeatedly warned against this scenario. A primary concern is that households and smaller companies will not be provided with enough energy when demand increases as quickly as has been the case. Commitments for energy to new large end-users, without increased energy generation, can threaten energy security for the public.

Landsvirkjun energy system is almost fully utilised, and the Company has made priorities for the coming years very clear. Landsvirkjun, the National Power Company of Iceland, plans to support electricity use and the energy transition further. Furthermore, supporting digital development, e.g., in data centres (not cryptocurrency mining) and innovation is essential. Landsvirkjun plans to support large end-users' progress, as has been done since the Company commenced operations.

In the coming years, Landsvirkjun will be unable to meet energy demand from new large end-users in the metal and raw material industries that would like to move their operations to Iceland. Furthermore, exporting energy via electric fuel or sea cable is not on the current agenda.

It is estimated that in 2035, 4 TWh will have been added to energy generation due to the energy transition, the domestic growth will need 1 TWh, and new and current large end-users will need 1.5 TWh in addition to existing use. Meeting this demand requires an increase of 0.5 TWh annually, which is possible with a concerted effort. Let us not forget that between 2010 and 2020, Landsvirkjun commenced operations of three new power stations: Búðarháls Power Station, Búrfell II Power Station, and Þeistareykir Geothermal Station, in good harmony with all. The energy generation of these three power stations is approximately 2 TWh. Hence, there is a precedent for a speedy development that can be done again.

Significant delays in issuing licenses for new power stations have been imposed. Landsvirkjun could have started construction at Hvammsvirkjun Power Station and Búrfellslundur Windfarm two years ago. If only that would have been made possible, the situation would not be as grave today.