Iceland Chamber of Commerce urges overhaul of power project laws

The Iceland Chamber of Commerce is calling for a sweeping change to the legal framework for power projects, arguing that current rules are holding back electricity generation. The proposal was reported by mbl.is on Thursday.

Ragnar Sigurður Kristjánsson, an economist at the chamber, said only three new power plants had begun operating since the law on the protection and use of energy resources took effect in 2011. Construction on one of those plants had already started that year.

Permitting a project can take at least 12 years, even if the process runs smoothly, because of the national energy plan, multiple appeal routes and a weak transmission system, he said. The chamber estimates that opening Hvammsvirkjun could take more than 30 years, despite it not being a particularly large project.

Kristjánsson said the need for more electricity had become clear after power deliveries were curtailed in the winter of 2023 to 2024. Iceland could be only one poor water year away from an electricity shortage, he said.

Potential projects mapped across the country could produce 80 terawatt-hours a year, five times the current supply, although many are within national parks and protected areas and are not realistically available for development. The 20 projects already in the utilization category would increase installed capacity by about 50%, according to Kristjánsson.

The chamber’s preferred option, which it calls the “general route,” would remove the procedures and complexities established by the 2011 law. Energy infrastructure and projects would follow the same permitting and planning processes as other business activity, with only the largest projects requiring approval by parliament.

The chamber says the highest-demand scenario in the government’s 2022 Green Paper would require electricity production to nearly double by 2040, to complete the energy transition and meet increased demand from large users.