Geothermal Energy in Iceland

Over the past few decades, Dr. Gudni Johannesson has seen his little island country make its name as a renewable energy powerhouse.

And last week at the RETECH 2010 Expo in Washington, the head of Iceland's National Energy Authority (Orkustofnun) gave me a lesson in clean power progress.

A Lesson in Clean Power Progress

Iceland's geological location could easily be seen as more menacing than promising. With 130 volcanic mountains, the place is a pressure valve for all the agitation that goes on underneath the earth's surface. That terrestrial restlessness has been turned into geothermal energy that accounted for 62% of Iceland's primary energy use in 2008.

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Glaciers mark the landscape and feed rushing rivers that gave Iceland over 12.4 Gigawatt-hours (GWh) of electricity production that year. Hydropower has served the capital city of Reykjavik since 1921, and hydro still dominates Iceland's electricity production. When you factor in heating, geothermal leads hydro 62% to 20%. Still, that's 82% of the country's power needs being met by clean energy! The rest is imported oil for cars and fishing vessels, which we'll discuss below.

Because of its abundant clean energy resources that Dr. Johannesson's institute, Orkustofnun, has been instrumental in developing, Iceland is a preferred spot for power-intensive industries like aluminum smelting. Smelter operations alone consumed nearly 12 GWh of electricity, which was 4 times the consumption of runner-up public services.

Moving along into the carbon-conscious 21st century, infotech companies have been migrating to the mid-Atlantic nation to take advantage of low temperatures that keep server farms cool and clean energy sources that keep greenhouse gas emissions close to zero.

Since 1940, Iceland has advanced from producing energy by burning peat and coal to an economy where the only non-renewable fuel sector left is imported transportation fuel, as we see in the chart below.

source: Orkustofnun

When you look at that, it's no wonder that this country of 320,000 people has been the home of the United Nations University Geothermal Training Program (www.unugtp.is) since 1979.

Iceland Teaches the World about Energy Quality

Engineers from dozens of countries with geothermal power potential, including Kenya, the Philippines, Poland, and China flock to the UNU-GTP in Reykjavik each year to tap know-how that has moved Iceland from bog energy to zero carbon emissions from electricity in 70 years.

Once there, Dr. Johannesson and other Icelandic experts introduce concepts that point to the maturity of Iceland's clean energy industry.

One of those ideas is "energy quality." As Gudni told me, "One of the major flaws of the energy debate is that we're not looking at the quality of the energy. When you use gas to heat houses instead of running a pump or a car, you're destroying energy quality."

When it comes to geothermal energy production, Geothermal Training Program students learn, as I did, that only about 15% of steam from boiling water can be used for work, in the physical sense. That's what turns the turbines that make geothermal electric plants productive. The other 85% of the heat that comes to use when waste water from the generation process is used as direct warmth for district heating systems.

Understand energy quality, and you reduce energy waste.

Iceland's segmentation of geothermal energy also serves as a prime example of what's called "co-generation."

Cogeneration is basically any case where two desirable products emerge from an energy production process. That could be electricity and fresh water, in the case of some desalination plants now in development; in Iceland's case, steam can be processed to generate electricity and household heat.

Ninety percent of households and buildings in Iceland are served by geothermal district heating systems, which knocks out a big cost and emissions source for the whole country.

Geothermal heating in mid-2009 cost 1 U.S. cent per kilowatt-hour (kWh). And get this — in a world where clean energy's detractors rail against feed-in tariffs and any other form of government subsidy, Iceland's heating oil cost 11 cents/kWh. Nearly half of that cost was subsidized.

With its geothermal heating infrastructure, Iceland has slayed an energy-intensive dragon few countries want to take on. All the 20% by 2020 goals we hear from the European Union and states actually refer to electricity. In many cases, they're being so cautious that they don't even want to bring up the monster task of converting heating, ventilation and air conditioning (HVAC) to clean processes.

Because Iceland started decades ago, the country's top renewable energy resource is now completely self-maintaining in terms of competitiveness. Instead, old hydropower plants and fossil fuel imports are the main source of the government's burden.

Make no mistake: rate-payers benefit when governments and industry partner to bring clean energy to maturity!

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Not Resting on His Geothermal Laurels

Gudni Johannesson is in a position to look back fondly on what he and his colleagues have done to change the face of Iceland. Even with national fiscal problems brought by the credit crisis, Iceland enjoys a high quality of life that is greatly boosted by the absence of smog-belching power plants and heating costs that vary with the whims of faraway despots.

Icelandic financial institutions like Islandsbanki are actually gaining an edge internationally when it comes to clean energy financing. That's because they keep scientists on staff! Decades of experience in utility-scale clean energy at home means Iceland's banks know a good project when they see it, wherever in the world it may be.

Yet there's one thing left that's nagging Gudni — something he resumed our conversation to tell me, even though he had a train to catch so he could get to New York before the snow came in. (He was escaping America's nasty winter to warm up at home in Iceland... How about that?)

You see, oil consumption from nearly every sector of the Icelandic economy has dropped in the past decade — except for automobiles. Cars and trucks now guzzle around 270,000 metric tons of oil, up from 125,000 tonnes in 1982.

That increase is a threat to Iceland's target of greening all its national energy use, both stationary and mobile.

So Iceland is keen on developing electric vehicle infrastructure that can be served by geothermal electricity. You can't fill up your gas tank with steam, but CO2 from geothermal wells can be turned into methanol and then dimethyl ether (a compound related to natural gas), and factory exhaust can be turned into hydrogen for fuel cells.

That's right, geothermal may even put the last piece of Iceland's clean energy puzzle into place in the near future.

I'll keep up with Dr. Johannesson and the rest of the dynamic clean energy engineers out there along the Mid-Atlantic Ridge, tracking their technology to market and bringing you and Green Chip International readers the stocks to profit.

Kveðjur (Regards),

Sam Hopkins