by Adam Windram
February 22, 2016
In October 2015, British Prime Minister David Cameron announced plans to explore building a 750-mile underwater cable to import renewable electricity from Iceland. Although this plan has been around for some time (Iceland and the U.K. signed a memorandum of understanding for an undersea cable project in 2012, but the concept of connecting Iceland to the rest of Europe has been kicked around for 60 years), progress has been slow due to concerns about technical feasibility, and fears in the UK and Iceland that the project will cause electricity prices to rise, and fail to create Icelandic jobs. However, research by Landsvirkjun, Iceland’s largest hydropower electricity utility and the organization largely responsible for bringing the idea from pie-in-the-sky to possible, suggests that the project (called IceLink) may be economically beneficial in the long run, as electricity prices in Europe have risen in recent years and there is higher demand for renewable electricity.
Currently, Iceland produces 99.99% of its electricity from renewable sources (most coming from hydroelectric and geothermal, with a measly 0.01% from fossil fuels), and also consumes 99% of its produced energy. Estimates of how much electricity Iceland could export in the future vary. A recent report from the North Atlantic Energy Network (NAEN) project suggests that Iceland has sufficient renewable energy resources in hydropower and geothermal to potentially double its current output from those sources. Considering that it generates 99% of its electricity from hydropower and geothermal, this would effectively double Iceland’s entire electricity output. It produced 18,120,438 Megawatt Hours (MWh) of electricity (1MWh=1,000,000 Watts/hour or 1,000 Kilowatts/hour) in 2014. If we assume that Iceland could double this amount, as claimed by NAEN, then they can export roughly 15 million MWh of electricity per year, using some rough back-of-the-napkin calculations (we have to factor in thermodynamics, as wattage loss, due to the fact that some of the electricity piped over long undersea cables converts to heat, resulting in an average 15% wattage loss if electricity travels over a 200MW cable, although larger cables with higher voltage can reduce this loss). Given that Icelanders are among the highest energy consumers in Europe (in part because energy costs there are incredibly cheap), household efficiency measures could further reduce domestic consumption, releasing even more electricity for export markets.
If we take typical per-household electricity consumption in the UK to be 4MWh/year (2014 est.), then Iceland’s spare energy could provide electricity to approximately 3.75 million households, again using some rough back-of-the-napkin calculations. That’s roughly 14% of the UK’s total number of households, but those rough estimates based on NAEN’s suggestion appear to be very optimistic, and even NAEN says much remains unclear about export potential.
The IceLink project by Landsvirkjun reports soberer estimates of electricity exports. The plan calls for increasing domestic geothermal production to cover Iceland’s domestic consumption, and then using “flexible” (I take this to mean rapidly dispatchable during high demand periods) hydropower to cover peak demand from the UK at an estimated 5,000,000 MWh per year by 2024. While not as rosy as NAEN’s estimates, that’s still enough to power 1.6 million homes in the UK, or a full 5.9% of UK households (2014 figures). Given that some independent estimates have shown costs of British offshore wind power to be $180-240 USD/MWh, versus electricity exported from Iceland at a cost of $120-180 USD/MWh, the Icelandic energy appears to be quite competitive with domestic renewables consumption. The IceLink project could therefore end up being attractive to consumers in the UK (though perhaps not to Icelanders, as a benefit to living there is cheap energy).
Ultimately the IceLink (or any other proposed undersea cable linking Icelandic energy to the UK and possibly greater Europe) will require many further feasibility studies and cost-benefit analyses to determine the project’s viability. The project could still falter domestically if Icelanders oppose it, either due to findings of higher domestic energy prices as a result of Icelink or opposition to the construction of more geothermal plants that could despoil some of Iceland’s scenery and popular volcanic tourist attractions. But, cost-competitive imports of 100% clean renewable energy into the UK could boost Europe’s efforts to cut carbon emissions post-COP21.
 The linked article from the UK’s The Independent newspaper says Iceland generates 95% of its electricity from geothermal. This is incorrect. 29% geothermal, 71% hydroelectric with negligible amounts of wind and fossil fuel generation [http://www.nea.is/media/talnaefni/OS-2015-T001-01.xlsx] in 2014, but it does generate nearly all of its thermal energy for heating homes from geothermal [http://www.nea.is/geothermal/direct-utilization/nr/91].