Electricity Shortage “Unacceptable” Says Environment Minister

Low cost of electricity in Iceland compared with the rest of Europe

Icelandic fish processing plants will need to power their operations with oil and diesel generators for the third winter in a row due to an electricity shortage, Vísir reports. This burning of oil and diesel cancels out all of the emissions saved by electric cars in Iceland thus far. Minister for the Environment and Natural Resources Guðlaugur Þór Þórðarson says the lack of green energy is unacceptable in a country that’s aiming for a green energy exchange.

Guðlaugur Þór says that the current shortage is the result of very few power plant construction projects in Iceland over the past 15-20 years. “This is not acceptable at all and we must do everything we can to resolve this as soon as possible,” he told reporters. The Minister criticised the red tape that delayed the approval of the construction of new power plant projects and called for streamlining the system.

Read More: 2021 Electricity Shortage Impacts Local Industry

Last June, the Environmental and Natural Resources Board of Appeal revoked the construction permit for the proposed Hvammsvirkjun hydropower plant in South Iceland, after the local council decided to review new information on the plant’s potential environmental impacts. The Board of Appeal emphasised that the National Energy Authority (Orkustofnun) had not followed the guidelines of the Water Council when preparing to issue a permit to the hydropower plant.

The Hvammsvirkjun plant would have an estimated capacity of 95 MW. For comparison, Iceland’s largest hydropower plants are the Kárahnjúkar and Búrfell plants, with respective capacities of 690 KW and 270 KW. Both were built to provide power to aluminium smelters. Hellisheiði Power Station is Iceland’s largest geothermal power plant, with a capacity of 303 MW.

Data centres use more electricity than Icelandic homes

There are also those who are sceptical of the need for additional power plants in Iceland, shifting the attention to energy-intensive industries that arguably contribute little to the country’s GDP. Snæbjörn Guðmundsson of the nature conservation organisation Náttúrugrið has expressed concern that the proposed Hvammsvirkjun hydropower plant would be used towards Bitcoin mining, a growing industry in Iceland. The National Power Company has stated that it would not build power plants for the express purpose of providing energy to Bitcoin mining companies.

Data centres (of which Bitcoin mining centres are a subcategory) in Iceland use 30% more energy than all Icelandic homes put together, and while the percentage of this energy that goes toward Bitcoin mining is not public knowledge, it could be as high as 90%.

Board of Appeal Revokes Permit for Hvammsvirkjun Hydropower Plant

The Environmental and Natural Resources Board of Appeal has revoked the permit of the Hvammsvirkjun hydropower plant, RÚV reports. Landsvirkjun, Iceland’s National Power Company, has called the ruling “a surprise.” The Board of Appeal finds that the National Energy Authority (Orkustofnun) has failed to fully comply with the law.

Permit revoked

On Wednesday, the local council of the Rangarþing ytra municipality in South Iceland delayed the issuance of a construction permit for the Hvammsvirkjun hydropower plant on the Þjórsá river. The decision was made in order to buy time for the council to consider new information concerning the project’s potential environmental impacts.

The proposed Hvammsvirkjun hydropower plant would have an estimated capacity of around 95 MW and would create a lagoon with a surface area of 4 square kilometres [1.5 square miles].

Yesterday, RÚV reported that the Environmental and Natural Resources Board of Appeal had decided to revoke the permit that the National Energy Authority (Orkustofnun) had issued for the Hvammsvirkjun hydropower plant. The revocation came a day after the local council of the Skeiða-og Gnúpverjahreppur municipality agreed to issue a construction permit for the hydropower plant.

Landsvirkjun’s application is still valid, although the power company must now decide whether the application will be renewed in light of the ruling. It took the National Energy Authority 19 months to process the application for the hydropower plant permit, which has now been revoked.

Failed to follow the Water Council’s guidelines

As noted by RÚV, the Board of Appeal received a total of nine appeals regarding the issuance of the power plant permit. Landsvirkjun demanded that the legal effects of the contested decision be postponed – but that appeal was rejected. Landsvirkjun had previously announced that preparations for the project would begin in July of this year and that it expected the construction of the power plant itself would start in April next year.

The ruling was published on the website of the Board of Appeal yesterday afternoon. According to RÚV, the Board of Appeal emphasises that the National Energy Authority (Orkustofnun) had not followed the guidelines of the Water Council when preparing to issue a permit to the hydropower plant. The Board of Appeal further noted that the National Energy Authority was tasked with ensuring that issuing of the licence was in accordance with the policy on water protection that was set out in the Icelandic River Basin Management Plan.

The Board of Appeal believes that there was a reason for a much closer examination in light of the scale of the project and the environmental effects it entails. A lack of data or strategic planning cannot absolve the government of its legal obligations in such a decisive way.

Finally, the Board of Appeal finds that it would have been normal for the National Energy Authority to seek formal instructions from the Environmental Agency, which is in charge of administration in the field of water protection.

“Bad news for Icelandic society”

In an announcement from Landsvirkjun, the ruling is described as “a surprise,” as Landsvirkjun maintains that it had followed the National Energy Authority’s guidelines in its application for the permit. Landsvirkjun is now considering what the ruling entails and is awaiting instructions from the National Energy Authority, RÚV reports. This will possibly delay the project, but – as previously noted – preparations for the construction were planned to start in July this year with construction for the power station itself assumed to begin in April of next year.

“This decision may delay construction. This would be bad news for Icelandic society, which is aiming for an energy transition; a lack of renewable energy is likely over the coming years,” the announcement reads.

Energy-intensive industries are largest consumers

As noted by IR yesterday, the Hvammsvirkjun plant would have an estimated capacity of 95 MW. For comparison, Iceland’s largest hydropower plants are the Kárahnjúkar and Búrfell plants, with respective capacities of 690 KW and 270 KW. Both were built to provide power to aluminium smelters. Hellisheiði Power Station is Iceland’s largest geothermal power plant, with a capacity of 303 MW.

Snæbjörn Guðmundsson of the nature conservation organisation Náttúrugrið has expressed concern that the proposed Hvammsvirkjun hydropower plant would be used towards Bitcoin mining, a growing industry in Iceland that is energy-intensive but contributes relatively little to the country’s GDP. The National Power Company has stated that it would not build power plants for the express purpose of providing energy to Bitcoin mining companies.

Delay Issuing Permit for Hydropower Plant

A local council in South Iceland has postponed issuing a permit for the construction of a large hydropower plant on Þjórsá river to consider new information about the project’s potential environmental impacts, Vísir reports. The proposed Hvammsvirkjun hydropower plant would have an estimated capacity of around 95 MW and would create a lagoon with a surface area of 4 square kilometres [1.5 square miles].

Salmon fishermen and conservationists oppose power plant

The locality of Rangarþing ytra’s website states that a new message has been received from the Iceland’s North Atlantic Salmon Fund and the Fishing Association of Þjórsá river (Veiðifélag Þjórsár) calling on the local government to reject the National Power Company of Iceland’s request for a construction permit for the plant. “It was suggested that the matter be postponed until the next extraordinary meeting of the local council to give the locality’s environmental committee the opportunity to discuss the matter, given that new information regarding certain environmental aspects has been received,” the meeting minutes state.

One other local council is required to sign off on the hydropower plant’s construction permit, the council of Skeiðahreppur and Gnúpverjahreppur, and head of the local council Haraldur Þór Jónsson told reports the permit would be processed despite the delay in Rangarþing ytra. The National Power Company applied to the two localities for a construction permit for the plant last December after the project was approved by the National Energy Authority of Iceland.

Energy-intensive industries are largest consumers

The Hvammsvirkjun plant would have an estimated capacity of 95 MW. For comparison, Iceland’s largest hydropower plants are the Kárahnjúkar and Búrfell plants, with respective capacities of 690 KW and 270 KW. Both were built to provide power to aluminium smelters. Hellisheiði Power Station is Iceland’s largest geothermal power plant, with a capacity of 303 MW.

Snæbjörn Guðmundsson of nature conservation organisation Náttúrugrið has expressed concern that the proposed Hvammsvirkjun hydropower plant would be used towards Bitcoin mining, a growing industry in Iceland that is energy-intensive but contributes relatively little to the country’s GDP. The National Power Company has stated that it would not build power plants for the express purpose of providing energy to Bitcoin mining companies.

Bitcoin Mining a Growing “Waste of Energy” in Iceland

Neither Icelandic authorities nor data centres in Iceland will reveal how much energy is used to mine Bitcoin or other digital currencies in Iceland, Snæbjörn Guðmundsson of nature conservation organisation Náttúrugrið told Vísir. Data centres use 30% more energy in Iceland than all Icelandic homes put together, and while the percentage of this energy that goes toward Bitcoin mining is not public knowledge, it could be as high as 90%.

Iceland’s abundance of renewable energy and cheap power has had both data centres and Bitcoin mining operations flocking to the country in recent years to set up shop. Iceland’s cool climate is another benefit, as data centres produce a lot of heat that would require additional energy to cool if located in a warmer climate. Both politicians and environmental activists have questioned the benefit of Bitcoin and digital currency mining operations for the Icelandic nation as well as their impact on the environment.

New hydropower plant could be used to mine Bitcoin

A 2018 report by KPMG stated that around 90% of energy used by data centres in Iceland had gone toward mining Bitcoin. In a column in Vísir, Snæbjörn refers to a recent analysis by Bitcoin expert Jaran Mellerud, who estimates that Bitcoin mining in Iceland uses around 120 MW of power, or around 85% of the 140 MW of power used by the country’s data centres in 2022. These figures have not changed much in recent years despite assertions from Iceland’s National Power Company (Landsvirkjun) that they would reduce the sale of Iceland’s energy to Bitcoin mining operations.

Snæbjörn is concerned that the proposed Hvammsvirkjun hydropower plant in South Iceland’s Þjórsá river would be used to power further Bitcoin mining in Iceland, although the National Power Company has stated that power plants would not be built solely for the energy needs of Bitcoing mining centres.

New York-based Bitcoin mining company told the Wall Street Journal last month that they would expand their operations in Iceland in response to an impending tax on Bitcoin mining in the United States. At the same time, Icelandic energy companies have stated there is no capacity for increased digital currency mining in the country.

“This is a waste of energy that should not be happening in a society like the one we live in today,” Snæbjörn stated.