Sept. 4 (Bloomberg) -- Iceland is moving forward with projects to connect its energy producers with households in Europe, the island’s industry minister said.
“This summer we’ve mapped out what precisely it is that we need to look into,” Industry Minister Ragnheidur Elin Arnadottir said in an interview last month. The ministry is now pushing ahead with “a few projects” in “the coming months,” she said.
The government and the nation’s largest energy producer, Landsvirkjun, have been exploring whether to press ahead with a project to link European households to its abundant thermal power. Building such a link is estimated by Landsvirkjun to cost as much as 2 billion euros ($2.6 billion), or about 17 percent of gross domestic product. Construction of the 1,170-kilometer (727-mile) submarine cable would need a bilateral accord with the U.K., as well as deals on buying and selling electricity.
Arnadottir has met with then Secretary of State for Energy Michael Fallon, “who confirmed the U.K.’s interest in this project,” she said.
“There’s understanding on their behalf that we need time to consider the possibilities here, as this project would be huge in any applicable scale which requires consideration and thought,” she said.
The government estimates that 75 percent of Iceland’s energy capacity is undeveloped. Hydropower from the nation’s glaciers accounts for about 73 percent of production and the rest is generated from geothermal sources. Less than 40 percent of the available geothermal energy, which taps the volcanic island’s heat, is used to make electricity.
The north Atlantic island of 325,000 inhabitants is seeking to diversify its economy as it recovers from Europe’s biggest banking collapse this century. The country produces 17 terawatt hours of electricity, a figure that could be doubled, according to Landsvirkjun. For the project to be feasible, Iceland must sell at least 5 terawatt hours via the cable, the company’s Chief Executive Officer Hordur Arnason said in May.
Iceland is in no rush to hook its power grid up with the rest of Europe, according to Arnadottir.
“I intend to ensure while I’m Industry Minister that this matter is looked into carefully and all aspects are scrutinized,” she said. “We’re not missing the train here -- if this is as desirable as some people have claimed, this train isn’t leaving without us.”
To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik at firstname.lastname@example.org
To contact the editors responsible for this story: Jonas Bergman at email@example.com Alastair Reed