Geothermal Iceland: this land of fire and ice is pushing the limits of its natural energy

While much of Europe suffers from escalating fossil fuel prices and fears of winter power cuts, Iceland – which has taken advantage of its natural resources by tapping into the geothermal heat lying deep underneath its soil and harnessing the power of vast amounts of snowmelt cascading from its interior to the ocean, has enjoyed more stable energy prices. Essentially 100% powered by renewable energy, in recent years its attracted a variety of industries, such as aluminum producers and, more recently, data centers. But changing rainfall patterns, rising populations and heavier personal consumption is pushing hot water production to its limits. Nevertheless, the nation is proud of its dependence on geothermal energy, a knowledge-base its long “exported.” Lead blogger and podcaster, Michael Buchsbaum has the story.

Krafla geothermal power plant in Iceland. (Photo by Ásgeir Eggertsson, CC BY-SA 3.0)

Peaceful innovations

For much of the last fifty years, Iceland’s most significant global contributions has been and continues to be its commitment to climate solutions such as geothermal energy, said Guðni Th. Jóhannesson, president of Iceland, in a recent lecture given to Cornell University students.

According to the Institute for Economics and Peace’s Global Peace Index, Iceland, a founding member of the North Atlantic Treaty Organization (NATO) and a global leader in democracy and human rights is the world’s most peaceful nation.

With a total population of under 400,000 souls, many of whom rely upon special dating apps to prevent cousins from coupling, Iceland places a strong emphasis on building up its “innovation” ecosystem as it pursues carbon neutrality by 2040.

Geothermal Iceland

An island nation located far from just about everywhere except even more isolated Greenland, the country has long survived on its self-reliance and independence.

It’s largely those traits that propelled it to turn to geothermal energy and hydroelectricity, which together account for nearly 70% and 30% respectively of the country’s energy mix to power itself.

Though geothermal energy produces less than half a percent of the world’s energy, five geothermal power plants scattered about the island supply about a quarter of Iceland’s electricity use and two-thirds of its home heating.

With a total installed geothermal power generation capacity of 755 MW, Iceland is today among the top 10 geothermal generating countries worldwide.

With over 200 volcanoes across it, Iceland also uses its abundance of geothermal energy to power and heat its many greenhouses, which contribute to the country’s high levels of local food production, as well as for district heating. Currently 90% of all its homes are heated by geothermal energy.

That heat is also used for bathing and swimming which helps Iceland attract an increasing amount of tourists (like this author) who traveled there with the hopes of soaking in its many hot springs between enjoying its unparalleled hiking, whale watching and other natural opportunities.

However it wasn’t that long ago that Icelanders, who before World War Two were by and larger poorer and unhappier, previously relied on peat and imported coal and oil to power its few industries, scattered settlements and heat most homes.

But that all started to change in 1990.

Over the following 25 years, geothermal use grew by 1700% thanks to the Iceland Deep Drilling Project, which drilled wells all over the island some 15,000 feet below its surface.

Unsurprisingly, during this time, Iceland also enjoyed a 25% increase in population.

“The capital, Reykjavik, about the time I was born, was every day under a black cloud from the smoke from the coal fires,” Olafur Ragnar Grimsson, Iceland’s former president, said in a 2016 interview.

“This transformation into the leading example in the world in a clean energy economy came from a country which, perhaps, had the greatest odds against it.”

Since Iceland began commiting to clean energy, it’s also attracted investment from energy-intensive industries.

Now the world’s biggest power producer relative to the size of its population, Iceland sells almost 80% of the electricity generated in the country to its heavy industry — the bulk of that made up by aluminum smelters belonging to Rio Tinto Plc, Century Aluminum Co. and Alcoa Corp.

In recent years, data centers looking to operate sustainably are also starting to locate in Iceland, where long periods of darkness and cold provide free natural cooling, further lowering their operating costs.

Exporting Geothermal know-how

As a small nation, Icelanders are used to cooperating effectively with larger partners abroad and Icelandic companies often work together on international projects.

Icelandic companies and consultants have been involved in geothermal projects all over the world, including Ethiopia, Kenya, Turkey, Hungary, Germany, El Salvador, Indonesia, and China.

Arctic Green Energy has provided an estimated reduction of 16 million tons of CO2 by providing space heating with geothermal to replace coal as an energy source for house heating in China.

Reykjavik Geothermal, meanwhile, is taking part in the Tulu Moye geothermal project in Ethiopia.

Iceland has also run the Geothermal Training Programme, GRÓ GTP, for students from the developing world since 1978, and 718 fellows have graduated and brought their specialized geothermal science and engineering training back to their home countries to help them realize their geothermal potential.

Hot water crisis?

Due to a lack of rainfall as well as increasing usage, throughout 2022, Iceland’s hot-water supply has started nearing its limit according to local media outlet, Vísir.

Going forward, utility companies may need to begin rationing hot water during long periods of cold weather.

In an interview with Vísir, Lovísa Árnadóttir, a public relations officer with Iceland’s federation of energy and utility companies or Samorka, related the seriousness of the situation. Basically hot-water use has outpaced population growth. With demand in the capital of Reykjavik expected to increase by 3% annually, already stretched utility companies are starting to worry.

“If we peer further into the future, to the year 2060, for example, forecasts suggest that the output of the entire heating system would need to be doubled. In terms of relative size: the Hellisheiði Power Station, which provides hot water for most of Reykjavík, is approximately twice the size of the Kárahnjúka Power Station. And so we’re talking about a lot of energy, and doubling the output is no small task,” Lovísa told Vísir.

Currently, some 60% of the energy used in Iceland comprises hot water for domestic heating, baths, and household consumption. This amounts to 43 terawatt hours or twice the energy produced by all of the nation’s electric power stations.

“The current production areas are already operating at maximum capacity, and so we need to look for ways to make them more efficient.”, Lovísa continued.

Though utilities are looking to expand, one of their greatest challenges is complexity of geothermal exploration and navigating new geothermal systems.

If the island nation continues to deal with long periods of cold weather, utility companies may need to ration hot water near-term.

The need to increase generation capacity “is quite urgent,” said Hordur Arnarson, chief executive officer of national power company, Landsvirkjun HF.

Still, there’s no quick respite in sight, as it will take at least four years to bring new generation capacity — up to 300 megawatts — online.


L. Michael Buchsbaum is an energy and mining journalist and industrial photographer based in Germany. Since the mid-1990s, he has covered the social, environmental, economic and political impacts of the transition from fossil fuels towards renewables for dozens of industry magazines, journals, institutions and corporate clients. Born in the U.S., he emigrated to Germany and Europe to better document the Energiewende. He is also the host of The Global Energy Transition Podcast.

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