“The more we look at this project, the more positive feedback we get,” said Hordur Arnarson, chief executive officer of Landsvirkjun, which produces more than 70 percent of Iceland’s power. “Over the past two years we’ve moved closer to this project becoming a reality,” he said in an interview in Reykjavik on May 21.
Iceland’s government and Landsvirkjun are studying whether the country should press ahead with the project, which could cost as much as 2 billion euros ($2.7 billion). Construction of the 1,170-kilometer (727-mile) submarine cable would need a bilateral agreement with the U.K. as well as deals concerning the purchase and sale of electricity.
The government estimates that 75 percent of Iceland’s energy is undeveloped. Hydropower from the nation’s glaciers accounts for about 73 percent of electricity production and the rest is generated from geothermal sources. Less than 40 percent of the available geothermal energy, which taps the earth’s heat, is used to make electricity.
The north Atlantic island of 320,000 inhabitants is seeking to diversify its economy as it recovers from Europe’s biggest banking collapse this century. The country currently produces 17 terawatt hours of electricity, a figure that could be doubled, according to Arnarson. For the project to be feasible, Iceland must sell at least 5 terawatt hours via the cable, he said.
“The conditions are in place for Iceland to produce 30 to 35 terawatt hours, should that be the decision of the authorities,” said Arnarson. “Producing that much energy would still protect a great deal of areas that we want to preserve.”