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July 16, 2013

Iceland Considers Exporting Geothermic Energy to Europe



After receiving wildly disparate estimations on the profitability of building an undersea power cable to Scotland to tap foreign thirst for energy, Iceland has asked for a second study on the subject.

The country’s first feasibility study, according to Bloomberg (News - Alert), found a “considerable degree of uncertainty” as to how profitable it will be for the volcano-riddled island to export its power to a range of European markets. The study said that the building of the power cable could result in anywhere from $32 million to $62.5 million in annual export revenue.  

“A divide that large can’t be used as the basis for a firm decision, although it makes for a good first step in information gathering,” Industry Minister Ragnheidur Elin Arnadottir told Bloomberg.

“A decision on the next step will be taken in the coming weeks, although I’m a little skeptical when it comes to putting down a timeframe,” she added.

The power cable would be the longest such ever built, stretching 727 miles undersea. But could very well be worth the trouble: as Iceland struggles to rise from the ashes of its 2008 economic meltdown, it’s looking for new revenue streams. It produced 17.2 terawatt-hours of electricity last year for its domestic needs. The U.K. month-ahead spot price values 17 terawatt-hours at $1.2 billion, according to Bloomberg Business numbers. Considering that the government has estimated that as much as three-quarters of the geothermic-rich island’s energy is untapped, energy could light up a big opportunity.  And, it has deep hydropower resources as well from its glaciers, which contribute 73 percent of Iceland’s electricity production.

Of course, a doubling or tripling of power output would require exploiting some environmentally sensitive regions, according to the National Energy Authority.

“If Iceland wants to build a 700-megawatt or 1,100-megawatt cable to the U.K. or other European countries, we have to realize the potential environmental impact such a project may have,” said Arnadottir. “It’s not just a question of plugging the cable into the next available socket.”




Edited by Blaise McNamee

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