Electricity Shortage in Iceland Impacts Local Industry and Data Centres Skip to content
electricity power lines south Iceland
Photo: Golli. Power lines in South Iceland.

Electricity Shortage in Iceland Impacts Local Industry and Data Centres

Iceland’s National Power Company has made a sudden decision to reduce electricity supply to industrial operations, including fishmeal factories, aluminium smelters, and data centres, RÚV reports. The decision was made due to an energy shortage caused by a series of issues, including a problem at a power station, low hydro reservoir levels, and limited transmission capacity. The affected companies have either had to reduce operations or switch to other power sources such as oil.

Data centres reduce operations

The National Power Company initially stated that cuts would be made in January, but decided yesterday that the supply would be reduced immediately. Sigríður Mogensen of The Federation of Icelandic Industries (SI) says the cuts have had an immediate effect on data centres. “We know of cases where Icelandic data centres have unfortunately had to close down customer service [yesterday]; early in the morning after this information became available. That means an immediate loss of revenue and we can keep in mind that the data processing industry generates at least ISK 20 billion in foreign exchange earnings for the national economy annually.”

Iceland’s abundance of low-cost, renewable energy and low average temperatures that minimise the need for cooling systems have made it an attractive destination for data centres and cryptocurrency mining operations in recent years. Sigríður added that the current cuts could have a long-term impact on the industry by leading potential customers to question energy security in Iceland. “This main this is that this is a definite loss for the economy and we need to learn the lesson from this to plan further ahead.”

Fishmeal factories switch to oil

CEO of Síldarvinnslan fishmeal factories, located in East Iceland, says the cuts will not impact production levels but will affect cost for the company, which will have to rely on oil for power. “Oil prices are high at the moment, whereas the price of electricity has taken into account that it is curtailable as it is now. So this will bring a rise in cost.” The capelin season is around the corner, meaning that fishmeal factories will have high energy needs.

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