Energy In Iceland

Iceland’s Energy Policy

Iceland is a unique country blessed with a unique set of natural resources. Unlike China, Iceland does not have large coal reserves, and unlike the Middle East Iceland does not have substantial oil reserves. This forced Iceland to import most of its energy. However, Iceland was blessed with lots of volcanic activity and many rivers.


Figure 1: Sources of primary energy

As illustrated by figure1, imported coal, oil and peat constituted almost all of the primary energy during the beginning of the 20th century. All of these had to be imported to Iceland raising the cost of energy.


The first hydroelectric plant was installed in 1904 by a local entrepreneur. It had a total output of 9 kW. A 1 MW hydroelectric plant was built in 1921 and quadrupled the national electrical power capacity.
Two large hydroelectric plants were built in 1953 and 1959. They produced 31MW and 26.4 MW respectively. Iceland has a large heavy industry sector and these electricity plants primary roles were to serve the heavy industries with power. In 1969 the first large scale hydroelectric power plant was built in conjunction with an aluminum smelting plant. It was 210 MW and also supplied electricity to the general population.
Since then, hydroelectric power has grown steadily. Today hydroelectricity supplies 82.8 percent of Iceland’s electricity demand and 16 percent of primary energy.

Geothermal Energy

Because of the large amount of volcanic activity in Iceland, there are many natural geysers and hot springs. Many of these can and are utilized to supply heat and power to the people and industries of Iceland.
Geothermal energy utilizes naturally hot water to heat things and make electricity. Geothermal was first used in 1930 to heat homes. Starting in 1943 geothermal became the most popular way to heat homes in the cold Iceland climate. Geothermal as a home heating source grew from 43 percent in 1970 to 87 percent in 2002.


Figure 2: Energy sources for space heating

It is estimated that between 1970 and 2002 Icelanders saved a total of $3.5 billion by heating homes with natural geothermal energy. The use of geothermal has raised the quality of life for people on Iceland. Besides saving money on heating homes, geothermal provides the population with heated swimming pools and snow and ice removal. Perhaps the largest contribution to the quality of life is the lack of pollution from burning fossil fuels.


Figure 3: Uses of geothermal energy

Geothermal energy is also used for electricity generation. One reason this has occurred is due to economics. Hydroelectric plants only come cost effective on large scales. If not a lot of power is needed, hydroelectricity is not a good option. However, the only other options were fossil fuel plants. Geothermal energy changed this. Starting in 1969 when the first geothermal power plant was installed, geothermal energy has been used to create safe, clean, and cheap power at all levels of production.

Hydrogen Economy

Most economies currently depend up fossil fuels for energy, such as petroleum and natural gas. These no-renewable fuel sources power today’s current way of life, including transportation, manufacturing, and other essential processes. But now there has been a large push for alternative energy sources to help benefit the environment. Iceland is one of the first countries to attempt to completely lose this dependency on fossil fuels with the use of cleaner hydrogen for power. This alternative method of producing energy is known as the hydrogen economy, where daily activities are fueled by only hydrogen.
There are many advantages to a hydrogen economy in comparison to fossil fuels, especially with the recent awareness of environmental pollution and the possibility of global warming. This extensive use of hydrogen in Iceland was first introduced by Dr. Bagi Arnason in the late 1970’s. At first, his plans were seen as unrealistic not truly worth the effort, but now Iceland has incorporated it into its national policy. Their long term plan is to switch of all Iceland’s transportation needs (vehicles including shipping vessels) to run of hydrogen instead of gas. This would even include having hydrogen stations (Figure 4) for commercial use. The ideal would to have these goals finished by 2050, making Iceland completely independent of fossil fuels for transportation. As of 2003, three hydrogen busses were put into public use; one is shown in Figure 5 below.


Figure 4: First Shell Hydrogen Station


Figure 5: Iceland's Hydrogen public bus

How Hydrogen Will Power Transportation

There are a few different ways that hydrogen will be able to power Iceland’s transportation needs. These methods include fuel cells, internal combustion, and other possibilities. One of the most promising and cleanest designs is fuel cells. The basic idea is that each vehicle will have a supply of hydrogen gas that is used in conjunction with a fuel cell and electric motor. The fuel cell does most of the work and basically combines the hydrogen with oxygen to produce electricity. The product of this process is water instead of harmful emissions from gas burning vehicles. This is the simplified process of hydrogen fuel cells can work on vehicles; the fuel cell process is summarized in Figure 6.


Figure 6: Fuel Cell design diagram


Due to Iceland’s small population and geographic size, it is well equipped to continue its use of sustainable energy sources such as hydroelectric and geothermal. Iceland was not blessed with large fossil fuel deposits, but Iceland has the natural resources and the technology to produce all of its electricity and space heating from renewable sources. The only sector that still runs on fossil fuels is the transportation sector, and Iceland has an ambitious plan to switch its 180,000 vehicles to hydrogen power.


1) Agust, Valfells, Ingvar Frdleifsson, Thorkell Helgason, Jon Imgimarsson, Gudmundur Thoroddsoon, and
Fridrik Sophusson. “Sustainable Gernation and Utilisatin of Energy: The Case of Iceland.” 19th
World Energy Congress. Sept. 2004.
2) Mckibben, Bill. “Heaven Help Bus”, July 19 2005;
3) “Inside the Industry – A weekly re-cap of Fuel Cell related stories”, April 2003;
4) “Hydrogen Buses”;

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