On Licensing and Time


Article by Jóna Bjarndóttir, Executive Vice President of Community and Environment.

On Licensing and Time

The process of licensing for energy generation is in disarray. The issuance of licenses takes an immoderate long time. Hardly ever has a standard and desirable processing time been defined beforehand, and it seems that an institution or a regulatory body is left to decide the duration of the licensing process. Clear rules of processes with a legal reference are certainly needed. Furthermore, repeatedly receiving requests to send duplicate regulatory filings for comments from the same official bodies must stop.

From Landsvirkjun’s long experience, it has become clear that the process from the time plans for new power stations are announced until they commence operations takes many years. Indeed, this long time is not a total waste. A formal discussion with stakeholders must occur, where everyone can present their point of view. The licensing process has consistently produced valuable comments on reducing the negative impact on the environment and nature and increasing the positive social effect.

On the other hand, the interminable licensing process means that months and even years are wasted while projects are on hold, waiting for licensing bodies and institutions to present their comments. Various stakeholders and licensing bodies are involved in the licensing process, offering comments and suggestions for improvement. However, the process is incredibly repetitious, as Landsvirkjun must send the same or very similar information to many entities, and repeatedly so, as the same entities, either as licensing issuers or commentators, review the information. Therefore, this process is tremendously complicated and excessively comprehensive for all involved, whether institutions, municipalities, or stakeholders.

Twelve Years at Best

The central pillar for constructing a power station for harnessing hydropower, wind, or geothermal heat is the Master Plan, the environmental impact assessment, and the municipality land plan. Next is the power station license from the National Electricity Regulatory Authority (Orkustofnun), and last is a construction permit from the municipalities. Assuming all goes as planned per current law and regulation, this process will take at least twelve years, i.e., from when plans for a new power station are submitted for recommendation in the Master Plan until the power station commences operations.

Consequently, three full election periods run during a power station's preparation and construction phase. Meanwhile, three new governments and three new councils may have come and gone. This mustn't mean the process has to start from the beginning three times, with the encompassing delay. Unfortunately, we have experienced countless delays recently, the administration organisation has been slower, and inquiries take increasingly longer to process. Even clear deadlines, governed by law, are vastly exceeded.

Hvammsvirkjun Power Station and the wind farm Búrfellslundur are a case in point. Plans for Hvammsvirkjun Power Station were first submitted to the Master Plan in 1999, or 24 years ago. The plans have now been through the submission process three times and have always been put in the power utilisation category by project management teams and professional groups.

The environmental impact assessment was issued by the minister in 2004. However, an invitation to tender for machinery for Hvammsvirkjun Power Station was almost complete when the economic collapse occurred, and plans for Alcoa expansion were canceled, leading to lower electricity demand. Furthermore, when the economy started to recover, reviving the Hvammsvirkjun Power Station's licensing process was impossible, as the government postponed issuing the license. At the same time, further research on the environmental impact of the planned hydropower station on salmon in the river Þjórsá was conducted. The findings were that it would be justifiable to put Hvammsvirkjun Power Station in the energy utilisation category again, which was done in 2015. Thus, the licensing process began again. The hydropower station was already in the municipalities’ land use plans, but a new environmental impact assessment had to be conducted for some parts of the licensing application. The process has mainly been to plan. However, it is mentionable that the National Planning Agency (Skipulagsstofnun) added an extra four months before issuing the environmental impact assessment, and the National Energy Agency, which usually takes four months to issue a power station license, for some reason took more than 18 months. Furthermore, Landsvirkjun is still waiting for the last licenses needed, which, once issued, will make it possible to start constructing the power station, with an estimated construction time of three years. Hopefully, Hvammsvirkjun Power Station will commence operations before three decades have passed since plans were first submitted to the Master Plan.

Búrfellslundur Wind Farm was submitted for evaluation to the Master Plan in 2013, or ten years ago. At the same time, an application for a license to research the area at Búrfellslundur was submitted. Landsvirkjun started conducting an environmental assessment to save time and shorten the preparation phase. However, the Parliament did not pass the Master Plan for five years, and as a result, a conclusion was not delivered in 2017 but in 2022. Then, Búrfellslundur Wind Farm was put in the energy utilisation category. It was hoped that planning matters would be concluded quickly, but delays have resulted from a dispute between municipalities and the government regarding the revenue split. A power station license or a construction license for a power station can not be issued until the power station has been confirmed in the municipality land use plans. This delay means the construction plans will be on hold for twelve months. Hopefully, the spades of the windmill farm will be churning before the year-end of 2026.

Clear Policy – Unclear Implementation

Soon, energy demand will not be met without new power stations and better utilisation of energy sources. Increased electricity supply is needed to meet energy security, reach climate goals, and support the energy transition. Furthermore, increased supply is required to meet higher energy demand, larger population, and green industrial development.

The government has agreed on a self-sustainable energy future in Iceland by 2050; it has set ambitious goals for Iceland to be fossil-fuel free by 2040 and reduce emissions until 2030. Time is in short supply; therefore, it is imperative to work quickly as preparations and development of power stations are complex projects that take a long time.

The government has set clear goals, but at the same time, the processing of power station licenses has gotten increasingly longer, and that is not due to new legislation or regulation.

We should demand quality processes when our renewable energy is harnessed. Furthermore, the drawn-out preparation phase for power station options that the Parliament has already put in the energy utilisation category is unacceptable.