ICELAND’S OTHER EXPLOSION

New Report on the Icelandic geothermal energy market
2 April 2010 (Islandsbanki)

"… Íslandsbanki released a new report on the Icelandic geothermal energy market…[that] looks at the energy market in Iceland, the political and legal framework in the country and the investment needs for currently planned geothermal power projects.

"The report highlights the fact that the aluminium sector represents…more than 75% of all electricity generated in Iceland…Other industrial activities…consume around 11% of all electricity, while general residential use only represents 5%… 25% of the electricity generated in Iceland comes from geothermal power plants, but more importantly around 90% of all homes are heated by geothermal energy. Use of geothermal energy for electricity generation and heating represents about 85% of all geothermal use…"

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"According to the report, the geothermal energy market is well advanced and many [privately ownd] companies are servicing the sector, e.g. with engineering, consulting and drilling services…Iceland is also a very active member of the international geothermal energy sector through its research and development abroad…Icelandic companies are also working internationally and their services and expertise is in demand globally…

"The report also addresses the current political debate on the issue of energy and the utilisation of natural resources…[I]t is clear that energy and energy intensive industries will play a key role in Iceland's efforts to strengthen its economy…[O]wnership and [repsonsible] usage rights for the natural resources…[must be resolved]…"

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"A large number of companies in the energy-intensive industrial sector are looking at establishing operations in Iceland. The energy companies are planning a large number of new power plants and extensions to existing installations. Governments and their agencies and organisations have played a major role in research and development…

"…[T]he risk profile of early stage geothermal explorations and development has always been an obstacle in attracting private money…For all the projects that are currently planned in Iceland, about USD 2,400 million of financing is needed, therefore capital from sources outside the current ownership group is needed for increased development of energy projects in Iceland…Iceland also competes with other countries for financing for geothermal projects. While the nation is competitive in terms of development cost, electricity pricing is considered low."