Iceland is one of the world’s leading countries in clean energy, with nearly 100 percent of its electricity being produced from renewable sources and the Icelandic government aspiring to achieve carbon neutrality by 2040.
SPOTLIGHT ON ICELAND RENEWABLE ENERGY
Iceland primarily relies on geothermal energy and hydropower, two of the leading sources of renewables, which together provide almost the entirety of its energy supply.
Remarkably, it currently exists as the world’s largest green energy producer per capita – yet its population stands at just under 389,444.
Renowned for its magnificent natural wonders, glaciers, rivers, waterfalls, wilderness, and untamed coastlines, Iceland is also home to some of the world’s most active volcanoes.
This fascinating geology has helped create several unique sources of renewable energy which, when combined with its people’s knack for ingenuity, mean the country punches well above its weight as a global sustainability leader.
A primary resource for Iceland, geothermal energy is power generated and stored underground, originating from the formation of the planet and the Earth’s crust.
Iceland’s first geothermal power plant started operation in 1969, followed by two larger plants in 1978 and 1979. With a total installed geothermal power generation capacity of 755 megawatts (MW) today, Iceland is amongst the top 10 countries in the world when it comes to electricity generation from this resource, with 90 percent of the nation’s homes heated from it.
Geothermal power is mostly utilised for the heating of houses and offers multiple cascading uses, such as swimming pools, greenhouses, fish farming, cosmetics, and much more.
Elsewhere, hydroelectric power is produced from moving water, meaning power plants are usually located on or near a water source. The volume of the water flow and change in elevation from one point to another determines the eventual amount of available energy.
Iceland’s first hydropower plant began operation in 1904 in Hafnafjörður before Reykjavík saw its first hydropower plant set up in 1921, closely followed by Akureyri in 1922. With the introduction of these game-changing plants, Iceland’s electricity market was created.
Despite being in the North Atlantic and wind being a constant in the country, there has been limited development of wind power projects. However, with average capacity figures that exceed offshore numbers for wind parks elsewhere, there is substantial data to support future opportunities for wind power development in Iceland.
Q&A WITH THE ICELAND RENEWABLE ENERGY CLUSTER
The Iceland Renewable Energy Cluster serves as the unifying platform for the nation’s energy industry, bringing together public and private entities and institutions across the full value chain. Rósbjörg Jónsdóttir, Managing Director, tells us more.
The Iceland Renewable Energy Cluster’s primary objective is to enhance the competitiveness of its members and society whilst showcasing their capabilities.
Formally established on 15th February 2013, the organisation initially operated as Iceland Geothermal, primarily focusing on geothermal energy. In 2018, it expanded its scope to encompass all energy sources in the country, including geothermal, hydropower, wind power, and Power-to-X.
The cluster’s membership comprises organisations spanning the entire energy value chain, from exploration to utilisation. This includes power producers, developers, research institutions, and various service providers such as consulting, manufacturing, maintenance, academia, and public entities. By representing all stakeholders in the energy sector, the cluster serves as a collective voice for the industry.
Emphasising collaboration, knowledge sharing, and progress, the cluster conducts various activities to foster innovation within the field. These initiatives aim to strengthen both local and global competitiveness and drive value creation in the renewable energy sector.
Firstly, could you talk us through the origins of the Iceland Renewable Energy Cluster – when was it founded, and what was its initial vision?
Rósbjörg Jónsdóttir, Managing Director (RJ): The organisation was originally founded as a geothermal cluster after several years of mapping and implementation. As such, the initial cluster map was published at our first Iceland Geothermal Conference in 2010 by Professor Michael Porter from Harvard Business School and his colleagues.
The mapping analysis of the geothermal cluster concluded that there are significant opportunities for its development in the coming years and decades, with major growth opportunities identified.
The cluster organisation is a non-profit, privately driven platform, and its role is to improve and increase our members’ competitiveness as well as benefit society. The cluster organisation is financed with membership fees and has up to 50 members from across the entire value chain, including both private and public entities, research companies, energy producers, and service providers such as direct and indirect consumers, educational institutions, and more.
What is your current take on the renewable energy landscape across both Iceland and the broader European region? What are some of the major challenges and developments facing the sector?
RJ: At present, the renewable energy landscape, both in Iceland and across the broader European region, is dynamic and evolving rapidly.
We are fortunate that we live with great natural resources and are lucky that they have been harnessed responsibly, with about 85 percent of the nation’s total primary energy supply derived from renewable sources.
When looking at Europe, renewable energy sources are increasingly contributing to the energy mix. As of 2023, renewables accounted for approximately 24.5 percent of the EU’s final energy consumption. Solar and wind power are the primary drivers of this growth, with significant investments and technological advancements in the area.
The major issues are in energy storage, as one of the biggest challenges is the efficient and reliable storage of renewable energy. Economic and financial factors can be a big hurdle as high initial costs and the need for substantial investments in infrastructure can hinder the widespread adoption of renewable technologies. Meanwhile, there is also the issue of grid integration; integrating intermittent renewable energy sources into existing power grids requires significant upgrades and innovations to ensure stability and efficiency.
What trends are currently developing and transforming the industry? How are you responding to them?
RJ: Recent developments show that everyone is integrating technological innovations. Advances in artificial intelligence (AI), big data, and battery storage are enhancing the efficiency and reliability of renewable energy systems. There has also been a surge in public and private investments, driving growth and development in the sector.
Our vision is that energy-related activities are the foundation of the nation’s welfare. The cluster contributes to further value creation and increased competence through strong innovation and active knowledge sharing, ensuring socioeconomic and environmental progress.
The key activities of our organisation are to enhance cooperation across our members and sectors whilst accelerating important improvements and changes to advanced energy-related activities. Our areas of focus include innovation and development, education, training, knowledge sharing, and international cooperation.
Are there any key investments or recent projects you’re working on that you’d like to pay special mention to?
RJ: Our great Iceland Geothermal Conference is one of the leading international geothermal conventions within the industry. It has been held five times and will be taking place for the sixth time in May 2027. As a result of this event, Iceland has been defined as one of the showcases for renewable energy and is regarded as a must-visit destination to learn about our great clean energy experience and development.
Over the years, we have managed to build a start-up accelerator within the sector and are now working on an investment fund which we hope to launch this year. This is one of our most important projects, and it will have a great impact on our industry, especially when it comes to finance and innovation.
We are also in the starting phase of building a collaboration platform with the Colorado School of Mines in the US, where we are constructing bridges between international and local academia and the commercial world, seeking the best possible solutions within the geothermal landscape.
How do you see the organisation developing over the next five years?
RJ: Our vision is to be the leading collaborator platform for those who want to develop the industry locally, as well as be a one-stop shop for those who are seeking the right Icelandic partner for new projects. We want to be part of the transitional wave that is gradually improving our industry, building up better communities for our people.
Following our guiding principles, strengthening the collaboration between different industry players both locally and globally, and sharing knowledge leads to further progress that everyone wants to see.
“We will continue to contribute to a more sustainable industry by helping to pave the way forwards, allowing us to grow a prosperous society”
Rósbjörg Jónsdóttir, Managing Director, Iceland Renewable Energy Cluster
Since its inception, how has the organisation developed and progressed in terms of its key objectives?
RJ: Overall, our objectives have been quite successful. The group has developed from being purely geothermal to being, more broadly, renewable-oriented.
We have been involved in leading many different projects over the years and acted as the bridgebuilder to numerous successful activities where our knowledge sharing has been the key.
What specific targets do you hope to achieve moving forwards?
RJ: We plan to keep up the good work, create new projects and actions that make our members more competitive, and build up collaboration with different players both locally and globally.
As well as this, we will continue to contribute to a more sustainable industry by helping to pave the way forwards, allowing us to grow a prosperous society.
