IceLink Under Study

The Independent just published an article about the Iceland-UK IceLink interconnector under the headline “David Cameron is poised to launch an ambitious project that could see Britain harnessing the power of Iceland’s volcanoes within the next 10 years.” The Independent is jumping the gun a bit because Cameron isn’t poised yet. All that’s actually happened is that a UK-Iceland Energy Task Force “has been set up to examine the feasibility of the scheme and told to report back in six months”. But still this is as good a time as any to take a brief look at the £4 billion Icelink project:

IceLink details

Landvirkjun, the National Power Company of Iceland, provides the following information on IceLink:

  • The interconnector will be over 1000km long, 800 – 1200MW HVDC transmission link connecting Iceland to GB, and offering bi-directional flows
  • IceLink will deliver a volume of >5TWh flexible renewable electricity per annum
  • We anticipate that the total cost to the UK consumer will be competitive with other domestic low-carbon alternatives
  • IceLink delivers reliable and flexible energy into the GB system at times of thin supply margins
  • IceLink allows energy to flow to Iceland at times of low hydro generation potential, e.g. due to unusually low precipitation levels.

(An intriguing question here is what happens when thin supply margins in UK coincide with periods of low hydro generation in Iceland . One assumes the UK-Iceland Energy Task Force will be looking into this.)

Iceland’s electricity sector

Figure 1 shows growth in Iceland’s installed capacity and annual generation since 1976 (data from Statistics Iceland):

Figure 1: Iceland’s installed capacity and electricity generation, 1976-2013

In 2013 Iceland generated 18.1TWh of electricity (12.9TWh hydro, 5.2TWh geothermal) from 2,768MW of installed capacity (1,986MW hydro, 665MW geothermal, and 115MW “fuel”). Over three-quarters of the 18.1TWh was consumed in Iceland’s aluminum smelters and ferroalloy plants, which are there to take advantage of the cheap hydropower and which are responsible for most of the growth in electricity output. (The upward jump in 2007/08 was caused by the startup of the Alcoa Fjardaál smelter and the 690MW Kárahnjúkar hydro plant which services it.)

Availability of power for export

Interconnectors are supposed to be two-way streets, but in the case of IceLink it seems to be generally accepted that the dominant direction of flow will be from north to south. Can Iceland deliver terawatt-hours a year of electricity to UK after Icelink goes into operation? It certainly could not have done so in 2013; it would have to generate a lot more electricity before it could. Where is it to come from? According to Landvirkjun it will come from “the surplus energy in the renewable hydro system that is not currently harnessed due to economical and operational limitations”. I assume  they are talking about building more dams because there probably isn’t much surplus energy to be had in the existing hydro system, which in 2013 operated at a capacity factor of 74%, unusually high for hydro. I believe there are also plans to expand geothermal (and even to build wind farms – why on Earth would Iceland build wind farms?) but I can’t find any specifics.

At least Iceland doesn’t have a serious peak load problem. Compared to the sine-wave-shaped demand curves we are used to seeing Iceland’s demand curve is effectively flat, as shown in Figure 2. This is largely a result of the high proportion of baseload generation needed to service the island’s metal refining industry:

Figure 2: Iceland’s electricity demand, March 4-10 2013 (2,260MW is understood to have been peak demand for the year).

Power imports from Iceland

IceLink will have a capacity of only ~1GW – a small fraction of the UK’s ~55GW peak winter demand – but it’s a gigawatt of hydro (with maybe some geothermal thrown in) so it could be the difference between lights on and lights out during a cold, sunless, windless winter evening when no one else in Europe has any power to spare. ~5TWh of annual imports also represents a small fraction of the UK’s ~320TWh annual consumption but could be useful in balancing intermittent renewables generation. So Icelink isn’t a dead loss. As always, however, the question is whether the £4 billion installation cost wouldn’t be better spent on a few gigawatts of new CCGTs or as a down-payment on a nuclear plant. I’ve not had time to look into this but I suspect the CCGTs might win. Another problem is that Icelink isn’t scheduled to be in service until 2024, which is rather a long time to wait.

Finally comes the question of what the Icelanders think of becoming a power exporter. I understand that there’s a certain amount of local opposition to the concept of turning Iceland into a power plant for Western Europe, but plans are on the drawing board:

Figure 3: Proposed interconnectors between Iceland and Western Europe (image credit Askja Energy)

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37 Responses to IceLink Under Study

  1. garethbeer says:

    And what happens if our currency is so devalued we cannot afford to buy off them (something the Icelanders know all about, but rejected the bankruptcy proceedings & still have a country)?

    Looks like another overpriced boo dongle, smells like one, probably is one…

  2. Euan Mearns says:

    Iceland has a population of 323,000, hence the minuscule electricity consumption. Installed hydro capacity is not much higher that the UK, although higher river flows will provide continuous production and higher load.

    Why would they build IceLink to flow both ways when it is clear the intention is for Iceland to export a relatively minuscule amount of electricity to Europe, presumably at a high profit. Why would Iceland ever want to import electricity from Europe?

    They are perhaps fantasising about following the Scandinavian model where Norway / Sweden imports surplus wind power when it suits them. This is offset against their own domestic consumption, which with a combined population of 14.6 million, is substantial. Iceland does not have any domestic consumption against which to balance UK wind.

    • Euan Mearns says:

      Why would a country with water resources like this ever ever want or need to import electricity from Europe? It does allow UK politicians to go on waffling about balancing excess UK wind against hydro.

      The UK doesn’t even use its own hydro for balancing wind.

      http://euanmearns.com/hydro-balancing-wind-in-the-uk/

      • Why would a country with water resources like this ever ever want or need to import electricity from Europe?

        Because of global warming, of course:

        http://en.vedur.is/ces/project/Hydropower_snow_ice/

        Change in glacial runoff is one of the most important consequences of future climate change in Iceland, Greenland and some glaciated watersheds in Scandinavia. Such changes will have a strong impact on the hydropower industry as flow volumes, seasonalities and extreme values change ….. During historical times, glaciers and ice caps in the Nordic countries have retreated and advanced in response to climate changes that are believed to have been much smaller than the greenhouse-induced climate changes that are expected during the next decades to century.

        • roberto says:

          “During historical times, glaciers and ice caps in the Nordic countries have retreated and advanced in response to climate changes that are believed to have been much smaller than the greenhouse-induced climate changes that are expected during the next decades to century.”

          Hit the BS button!…

          What a pile of crap!… Scandinavia is rebounding because it does not have anymore a (several) km-thick ice cap on it… and right where I am sitting now there used to be a 3 km-thick glacier, running a couple of km southbound…

      • Leo Smith says:

        I think the idea is that we could export peak wind at almost no cost to iceland, conserving their dammed water, and buy it back at hugely marked up prices.

        To give the illusion that wind is actually working, needs a lot of hydro to provide the baseload. If that hydro is running short of water, but has plenty of peak power capability, then the things sort of works.

        Of course stuffing in some sensible nukes is far better…

  3. jim brough says:

    Connecting geothermally produced electricity from Iceland to Europe seems like a good idea, as good as building solar plants in the Sahara to make electricity for Europe.
    That needs a serious analysis of the engineering and cost of such a project against the benefit it is suggested will be supplied.
    Wave, geothermal and tidal electricity continue to be promoted in the public mind as saviours of planetary doom, much has been spent but nothing has been delivered.

    Jim Brough

    • Connecting geothermally produced electricity from Iceland to Europe seems like a good idea, as good as building solar plants in the Sahara to make electricity for Europe.

      Iceland geothermal is actually much better than Sahara solar because geothermal is dispatchable and solar isn’t. But when you look at how much geothermal power Iceland might ultimately be able to supply to Europe you find that it won’t be enough to make a difference. It’s estimated that Iceland could install another 12GW of geothermal capacity – about 18 times current capacity – if it built a geothermal plant everywhere it could, which it won’t. But even if it did the extra 12GW would still amount to only about 100TWh/year, a mere 3% of current EU28 annual electricity demand.

  4. Günter Weber says:

    At the moment (very low interest rates) a government-backed 4 billion investment will need to pay something like 80 million each year of interest. To pay back the debt, let’s put on that another 120 million of redemption. If I do my math correct, this ends up to a cost of 0.04 per kWh (assuming 5,000,000,000 kWh per year). In addition, we need to build about 1 GW of new capacity on Iceland. I assume that not all the ‘good locations’ for hydro plants in Iceland are already occupied, so let’s say we get this 1 GW capacity for an additional 2 billions. We are at 0.06 per kWh. Let’s add another 0.02 per kWh for losses and O&M costs.

    We end up with 0.08 per kWh. Maybe 0.1 per kWh if all involved parties also get a small profit out. Expensive, but feasable. Once capital costs are payed back, it will become really cheap.

    • Leo Smith says:

      nuclear is cheaper

      • gweberbv says:

        Leo,

        I agree from a technocratic point of view. However, in the real world you have to take into account that most people do not tolerate releases of radioactive material indepent of the amount/concentration. The need to build nuclear power plants as safe as is technologically possible together with the permant risk that public oppinnion is asking for permanent shutdown makes these facilities ridiculously expensive in most countries of the ‘western world’.

  5. Ted says:

    “Once capital costs are payed back, it will become really cheap.”

    Am I missing something here? Will Iceland not sell us electricity at the highest price it can? If this scheme is so cheap per unit of power I’m all for it. Let the Icelanders finance it and build it let the UK contract to buy the power for 30 years at a price competitive with current gas/coal generation.

    • A C Osborn says:

      Did you two miss this part?
      “We anticipate that the total cost to the UK consumer will be competitive with other domestic low-carbon alternatives”
      ie very expensive compared to Gas/Coal.
      I wonder what the losses are on 1000km of cable?

      • Willem Post says:

        AC,

        About 2c/kWh

      • Leo Smith says:

        and the lifetime of such a cable. Since I’ve been monitoring the interconnects they have been running at a pretty low capacity factor due to cable damage, and various issues with rectifiers and inverters.

        O & M costs on a DC link are non trivial which rather reflects on “Once capital costs are payed back, it will become really cheap.”

    • Günter Weber says:

      Everybody tries to sell at the highest possible price. What the market pprice for electricity will be in about 35 years from now nobody knows. But you can be sure that hydro still will be one of the cheapest producers. And once the interconnector has payed back its huge construction costs, the transport from Iceland to UK is also no longer expensive. Losses will probably be on the order of 5% to 10%.

      However, comparing the costs of electricity from new hydro plants in iceland transmitted via a new 1000 km long interconnector to UK with the production costs of old coal plants is like comparing the labour costs of slave workers in eastern Congo with the costs in – let’s say – Sweden.

      • roberto says:

        “old coal plants is like comparing the labour costs of slave workers in eastern Congo”

        ???

        Germany burns most of its coal/lignite extracted by domestic slaves.

  6. Lars says:

    If I lived in an “overcrowded” island with an energy craving population and huge need of energy imports in an increasingly insecure World where you don`t know exactly what tomorrow may bring and under the threat of peak whatever I would be thrilled with joy to receive 5 TwH of clean, cheap power from a friendly neighbour. But that`s just me, another neighbour… 🙂

    • Euan Mearns says:

      Yes, if it was a simple proposition to import energy because UK needs it that’s a different matter. When Langeled was built I don’t recall being told that UK may also export gas to Norway.

      And I’d prefer to eliminate the need for electricity imports.

      • Euan: Another question is whether the power UK imports from Iceland will actually stay in UK. With all the existing and planned interconnectors between UK and the continent plus the byzantine pricing mechanisms that govern flows along them it could pass right through and finish up in Luxembourg or Poland.

      • Günter Weber says:

        What is the problem with importing/exporting electrictiy? And is autarchy a valid goal only for UK or also for Greater London?

        An interconnector from Iceland to UK could provide electrictiy for the next 100 years. No risk that the guys on Iceland sell to another costumer. No risk that hydro plants in Iceland run out of fuel. Not risk that after a greenish coup d’etat all plants are forced to close down.

        For the first 25 years it will just be a tiny bit more expensive than simply building a gas-fired plant.

        • What is the problem with importing/exporting electrictiy?

          There’s no problem with exporting electricity. If you have it and can’t use it only makes sense to sell it to someone else.

          There’s also no intrinsic problem with importing electricity. If you can buy it from someone else at less than what it would cost you to generate it yourself then it only makes sense to do so.

          So what’s the problem? It’s that imports are not a secure source of supply when you have a group of linked renewables-heavy grids, which is the way Europe seems to be headed. When you are out of wind and solar everyone else will be too. There will be no spare power to import, and if you’ve assumed there will be – as so many countries now seem to be doing – your lights will assuredly go out.

          • Günter Weber says:

            Roger,

            in principle I could agree, but for the case of Iceland this objection seems strange to me.

          • Günter: You’re quite right. The objection doesn’t apply to Iceland. But your comment didn’t specify Iceland either, so I addressed it in principle, as you put it. 😉

        • Euan Mearns says:

          Gunter, why should the UK bind itself to importing electricity from Iceland, further destroying our trade balance and reducing our energy security, when we can generate our own low carbon electricity at home?

          Here is the rational given to us by the Icelanders:

          1) The interconnector will be over 1000km long, 800 – 1200MW HVDC transmission link connecting Iceland to GB, and offering bi-directional flows

          I don’t see Icleand ever ever wanting to import electricity from the UK or Europe. So this is a false promise.

          IceLink will deliver a volume of >5TWh flexible renewable electricity per annum

          A 1 GW interconnector would deliver 8.8 TWh 24/7. And the plan will be to run it at capacity 24/7 one way. Why would you do anything else?

          We anticipate that the total cost to the UK consumer will be competitive with other domestic low-carbon alternatives

          The vast majority of consumers don’t give a toss about low-carbon energy. I dare say the price offered most of the time will be competitive all the time. It will run as baseload.

          IceLink delivers reliable and flexible energy into the GB system at times of thin supply margins

          IceLink will deliver power all the time regardless of how thin supply margins are. Our money and jobs will be heading in the other direction.

          IceLink allows energy to flow to Iceland at times of low hydro generation potential, e.g. due to unusually low precipitation levels.

          So perhaps you (or more likely Roger) can tell us when Iceland last has a problem with low ppt levels? And if this were true, then the link should never be built, since it is not dispatchable.

          There may be sound reasons for building IceLink. The Icelanders would do well to tell us what they are.

          • Iceland hasn’t had a precipitation problem, or at least not one that’s affected its hydro output, since at least 1976. Between 1976 and 2013 hydro capacity factors have averaged 66%, with a low of 55% and a high of 77%, and for the last six years they have averaged 76%. These are remarkably high numbers for hydro – as I remember the average is usually around 40 or 45%. Those glacier-fed Icelandic lakes and rivers must really be something else.

            As to why Iceland wants to build Icelink, I think the simple answer is money. I don’t know how much Icelink power might sell for in UK, but if we assume it sells for 0.10 euros/kWh then 5TWh will net Iceland 500 million euros a year, or about 4% of current GDP.

          • Günter Weber says:

            Euan,

            simply see Iceland as a huge reservoir for renewable/CO2-free energy. You just need a plug (and then a few more GW of generation capacity in Iceland) to connect it to UK (or “Europe”). Don’t be afraid, you still can build a lot of nuclear power plants if you like. And the few hundred millions going to Iceland each year will not alter your trade balanace on a measureable level.

            Even if you do not care about CO2, it is stupid to burn precious gas/coal/oil instead of using never-ending hydro whenever/whereever possible.

            In case Iceland has enough hydro (or geothermal) potential for a reasonable price, why not build a 5 or 10 GW connection? Because of the trade balance?

        • Leo Smith says:

          The cables only last 10-15 years

          • gweberbv says:

            Leo, have a look at the (oldest part of the) Skagerrak HVDC link. In operation since the end of the 70s.
            It would be pure madness to build those connections if they were to last only a devade or two.

            Technical lifetime is above 50 years.

  7. ducdorleans says:

    installed geothermal end 2013 : 665 MW
    Annual generation geothermal 2013 : 5245 GWh

    665 * 24 * 365 / 1000 = 5825,4 …
    5245 / 5825,4 = 90% ..

    very nice ! (as would be expected …), IF you have it … 🙂

  8. BillB says:

    I do wonder at the economics of the Scandinavian interconnectors.

    I have yet to see detail on projected prices for the Norway interconnector, which is being sold to us on the basis that it will be used to export heavily-subsidised surplus Scottish wind output. Would think that there is little incentive for the Icelanders or Norwegians to buy expensive UK windpower at even cost price when they have plentiful cheap hydro. The Icelanders do not seem to need much balancing load to buffer their hydro and the Norwegians already have Danish and Swedish imports to balance their hydro in poor weather conditions.

    The Norwegians seem to have difficulty in building domestic wind capacity, even with subsidies, due to the price of hydro:
    http://www.rechargenews.com/wind/1402112/statkraft-cancels-1gw-norwegian-onshore-wind-plans?

    Perhaps some of the Scandinavian experts posting here can offer a more informed opinion on the economics of all this.

    • Leo Smith says:

      They dont buy it at cost: they buy it at market price, WELL below cost. We PAY as taxpayers, Scottish windfarms to generate electricity to be sold below cost to scandinavia, and then reimport it at a higher price when the wind drops.

      Lets say the cost of exporting it below cost is less than paying the curtailment payments we would otherwise be paying to the scottish windfarms, and the cost of importing it is cheaper than paying the sorts of prices STOR generators need to charge to be viable

      It all makes perfect sense if you start from the premise that renewable energy is a necessity.

      If you don’t then of course you end up with zero carbon nuclear replacing coal for baseload, and gas…

  9. climanrecon says:

    The UK should not be paying for this cable, it should be charging rent for passing Icelandic electricity on to Europe, see this article ( http://www.wrsc.org/story/iceland-looks-export-power-bubbling-below ), extract below:

    “In a nation with only 320,000 people, the state-owned power company, Landsvirkjun, which operates the Krafla facility, sells just 17 percent of its electricity to households and local industry. The rest goes mostly to aluminum smelters owned by the American giant Alcoa and other foreign companies that have been lured to this remote North Atlantic nation by its abundant supply of cheap energy.

    Now a huge and potentially far more lucrative market beckons — if only Iceland can find a way to transmit electricity across the more than 1,000 miles of frigid sea that separate it from the 500 million consumers of the European Union. “Prices are so low in Iceland that it is normal that we should want to sell to Europe and get a better price,” said Stein Agust Steinsson, the manager of the Krafla plant. “It is not good to put all our eggs in one basket.”

    What Landsvirkjun charges aluminum smelters exactly is a secret, but in 2011 it received on average less than $30 per megawatt/hour — less than half the going rate in the European Union and barely a quarter of what, according to the Renewable Energies Federation, a Brussels-based research unit, is the average tariff, once tax breaks and subsidies are factored in, for “renewable” electricity in the European Union. Iceland would not easily get this top “renewable” rate, which is not a market price, but it still stands to earn far more from its electricity than it does now.

    Eager to reach these better paying customers, the power company has conducted extensive research into the possibility of a massive extension cord — or a “submarine interconnector,” in the jargon of the trade — to plug Iceland into Europe’s electricity grid. Such a cable would probably go first to the northern tip of Scotland, which, about 700 miles away, is relatively close, and then all the way to continental Europe, nearly 1,200 miles away. That is more than three times longer than a link between Norway and the Netherlands, which is currently the world’s longest.”

  10. chrism56 says:

    The Cook Strait DC link connecting the North and South Island of New Zealand was commissioned in the 60s. It is in topography and undersea currents more rugged than that between Iceland and Scotland. It was also at the early stages of DC cabling (I think it was the second in the world. They have had to replace one cable and they have built a new DC to AC conversion facilities for uprated flows, seismic strengthening and modern technology but the old cables are still being used. It is now rated at over 1000MW so comparable in size to what is discussed above.
    That indicates that the proposed scheme is viable as an engineering project and has a probable very long life. How it stacks up economically is a different matter. These type of things are always under-costed and going for the lowest capital cost for major infrastructure components always ends in tears.

  11. tight boy says:

    Have you seen the article on CO2 conversion in this weeks Nature. The Icelanders are converting CO2 and H into methanol using geothermal. This is said to be a far cheaper way of exporting energy to the EU than building a £4bn link and with UK taxpayers paying for it.

  12. tight boy says:

    I sent a comment about this weeks Nature. An article about producing methanol from CO2 and H. Icelanders are producing it and it is said to be far easier to transport energy to the UK this way rather than by a DC link. I was told I had already sent it. but hadn’t.

  13. Steve A says:

    One (perhaps secondary) problem is where the link feeds into the UK. If it comes ashore in the far north of Scotland, then electricity flows have to pay for expensive onshore transmission to take the power south to Glasgow and beyond via TNUoS charges. At least UK consumers won’t have to pay for the losses on the DC link, unlike with offshore wind.

    Steve A

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