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The battle for control of Iceland’s energy

My latest post on the THINK platform – the tragic story of HS Orka.

In the last post I wrote about how a set of investors, meticulously assisted by the ruling powers in Iceland, managed to gain a controlling share in HS Orka, a geothermal energy company supplying green energy to Iceland’s southwest peninsula, Reykjanes, next to the capital Reykjavík. It was the first privatization of an energy company in Iceland, and was clearly engineered to transfer the company into the hands of people who had a very clear view of the fact that green energy would – and will – become ever-more valuable in the future.

Read the rest of the post here.

Calm, cool, sunny and perfectly exquisite. EPI and I walked into town today in the middle of the day and barely saw the sun – it was so low in the sky that it didn’t reach above the buildings to shine down on the streets. Except when there was nothing obstructing it – at which it shone directly into our eyes and was … blinding. It’s actually very dangerous at this time of year, and also in the spring, when the sun is at that angle for a long period – sometimes you can’t see a damn thing. Especially if you’re driving and your windshield fogs up. Anyway. Rambling. Right now 2°C [37F]. Sunrise was at 9.28, sunset at 4.52 this afternoon.



Comments on this entry are closed.

  • Alexander E. November 8, 2009, 12:04 am

    re: weather


    But the The Light Tower on Videy – das ist fantastish!
    We went there at after 9 pm – the light pole was pointing to zenith traveling …. two kilometers or higher? through the sky with stars. A kind of Northern Light but just vertical and still. But the scale is comparable.

    PS. Sorry I didn’t mention politics but the blog is about weather, right? 🙂

  • idunn November 8, 2009, 1:04 am

    Theft is theft, no matter how it is tarted up. At least when someone holds a gun to your head the message is clear, and they are even brave enough to accept a measure of personal risk. When corporations, politicians and lawyers do the same with paper they hide behind it, often with the gall to charge one for them emptying your pockets.

    The good news is that these geothermal resources are in Iceland, and likely to remain there. Those such as Mayor Hanna Birna Kristjánsdóttir, the better part of the Reykjavík City Council are more movable. Perhaps they should all be shipped off to visit with their pals Magma Energy in Canada. Last I checked, Iceland yet to be a full member of the EU, thus under no obligation to surrender their natural resources to a Swedish company (if in name only) or anybody else. And if THOSE guys don’t like it, they can leave as well. The resources can stay (in public hands, as before), and they can go.

    Either Icelandic laws mean something or they don’t. The public might remind these theif’s that the laws do matter, and since the transaction was illegal it is now null a void. They don’t have to like it, but they can leave.

  • kevin o'connor waterford Ireland November 8, 2009, 2:10 pm

    Worrying development really as you all seem to be stuck with this Icesave thing and how is it to be payed for ? by economic growth,but what can grow in Iceland, Tourism (Can grow),The fishing industry (static as its a hunter gatherer type thing) and last but not least the Jewel in the Crown cheap electricity that brought the Aluminium industry to Iceland(Bit of Controversy to let that one grow), where they seem to pay less than the Greenhouse vegetable industry guys who pay the same as the domestic customer in Iceland,if what I have read is right. Incidently could someone post how much a kilowatt hour costs a domestic customer in Iceland as here in Ireland we get the 2nd highest in the EU 16 cents a kilowatt hour (Inc VAT) ouch !!. So this industry is important for Iceland, server farms,greenhouses and perhaps direct export via undersea cable.The Icelandic equivalent of your Oil wells in Saudia Arabia.Does not seem good to lose control by some convuluted deal which Alda explained in her blog and I gave up trying to understand !!!

  • paulstpancras November 8, 2009, 3:13 pm

    Geo-thermal energy cannot be owned by any individual. It is collectively owned by the State of Iceland and is managed by the Iceland Parliament.

    Nationalise the resource under special fiscal need due to the Credit crunch.

    Then auction, to the highest bidder, the right to exploit it for 10, 15 or 20 years. eg UK mobile phone rights.

    Ask Willem Buiter how to do it. Alternatively set up a fund as Norway did for oil. Of course, thermal energy could power batteries for use in electric cars. Go green and build your own vehicules, especially trucks, seek a partnerships with India or Japan.

  • Vikingisson November 8, 2009, 4:58 pm

    And no doubt the rates will rise and keep rising. These kinds of deals aren’t done because they are called “green” with everyone feeling all tingly inside. As for the energy not leaving Iceland, in effect it will because the real value and increasing future value will leave as money and gawd forbid, that same old leverage value that got us in trouble in the first place. Good job, now your unique green energy will be no different than imported commodity fuels.
    Good ideas only remain good when in the hands of good people.

  • paulstpancras November 8, 2009, 9:47 pm


    Quite agree. It could be a co-operative or even a mutual that obtains the contract. All Icelanders own the wealth of geo-thermal energy. It could form the base of a new co-operative mutual credit union. Look at La caisse populaire Desjardins du Quebec as a model.

  • Vikingisson November 8, 2009, 11:42 pm

    yes, anything but giving away the steam rights. You can have any number of private companies doing wonderful things with the energy but I haven’t seen any cases of this kind of privatization that benefited the consumer or the country in general over the long term. I don’t know enough about La caisse populaire Desjardins du Quebec other than that Quebec has always been clever and long sighted with its resources. Compare that with how quickly Alberta has squandered its energy resources. Watch how quickly the companies will pack up, take the money, and leave behind the biggest pile of poison ever seen on mother earth.
    But Iceland is in a tight situation and the sharks will prey on that. The corruption that seems to still be in play will hasten that destruction. Regret will come later if it is allowed to continue for the sake of the quick fix. But for now I’m keeping a bit of that Icelandic optimism about the future.

  • James November 9, 2009, 12:11 pm

    The UK’s energy suppliers are regulated by Ofgem. If Iceland’s energy suppliers regulated similarly, what is the regulator’s independent opinion on this Magma Energy deal? Also, Ofgem normally insists on transparency (especially concerning potential takeovers and its effect on competition), so why isn’t Iceland’s energy regulator insisting that the details are the second bid are made public? Perhaps someone should submit a freedom of information request. It sounds like Reykjavik City Council is calling all the shots – like rogue officials in the Wild Wild operating to their own local laws…

  • James November 9, 2009, 12:11 pm

    “Wild Wild” -> “Wild West”…

  • Bromley86 November 9, 2009, 1:20 pm

    >If Iceland’s energy suppliers regulated similarly

    They won’t be. You have to remember that it’s a nation of only 300k people. In such a case, there’s no need for government to delegate everything, otherwise you’d end up with a massively bloated public sector.

    Also, if we accept that the Icelandic political system is riddled with nepotism-based corruption, having an “independent” regulator wouldn’t change a thing because the regulator would likewise be riddled with nepotism-based corruption.

  • James November 9, 2009, 4:54 pm

    Bromley86 – Well, if Iceland doesn’t have an independent energy regulator (and leaves such decisions to local councils instead), then its national government should at least force the local councils to be transparent about the bidding process. Or make some of the MPs redundant (an MP per 6000 citizens isn’t necessary) and retrain them to perform regulatory roles instead!

  • Flygill November 9, 2009, 4:55 pm

    A lot of people (including Icelanders) seem to think that Iceland has an almost unlimited supply of geothermal and hydroelectric energy that could be easily exploited to make Iceland prosperous at some time in the not-too-distant future.
    About a month or two ago there was an article on the Eyjan newsite by someone fairly knowledgeable who examined all the current and potential output of these “green” sources in all of the country. His conclusion was that Iceland has very little potential excess capacity — maybe enough to supply an expansion of one of the large aluminum smelters.
    Maybe it’s possible to argue with the author about the details but the general point is quite clear: Iceland does not have now, nor will it have in the future, anything like what has been imagined as its potential energy. It does not and will not be able to increase energy production by 10 times. Most of the energy has already been tapped. At most it can increase output by 30-50% of current output.
    I found this author’s conclusions well-argued and I can’t believe that people still carry on about this dreamland of free and cheap energy – -that’s a myth.
    Of course, it would be the intelligent policy choice for the country to undo the HS Orka deal and socialize the energy sources, such as they are, and increase the rates charged to the aluminum plants.

  • paulstpancras November 9, 2009, 5:19 pm


    Thank you for that. I stand informed. The EU needs both Iceland, the Faroes and Greenland to get a significant place at the Arctic Warming Table. Russia, Canada and the USA will want to carve it up between them. Iceland has a strong negotiating point for EU entry if that is what Icelanders want. Talk to Swedish Trade Unionists and business groups who negotiated Sweden’s entry in the early-mid 1990s.

  • Eliza November 9, 2009, 5:45 pm

    “green energy would – and will – become ever-more valuable in the future”, yes of course, but green energy needs quite a lot of capital in order to be able to make new investments. With Iceland short of money, privatisation was the logical thing to do, at least someone will be able to make the investments.

  • Flygill November 9, 2009, 6:56 pm

    The report was by Sigmundur Einarsson, a geologist, and originally published at smugan.is, “Hinar miklu orkulindir Íslands” (sarcastic title).
    You can read a summary here:
    (“Is the great truth about the great energy resources of Iceland empty chatter?”)
    Warning: this is rather depressing news, if you’re an Icelander.
    One of the amazing things about the Great Icelandic Swindle was how complete the theft was — anything of any value was stripped, stolen and carried off, like insects stripping a carcass. All the companies and real estate and fish quotas were leveraged up the neck, with the money disappearing mysteriously to the Caymans and elsewhere. The last hope of Iceland was its oil-field and geo-hydro energy – and now those two sources appear to offer no hope for relief.

  • James November 9, 2009, 8:52 pm

    Having read the comments, there is an obvious solution: Reykjavik City Council should approve a bold new programme of nuclear power stations! Far greener (from a climate-perspective) than carbon-releasing fuels, an isolated location (useful in event of China Syndrome), and side-products that rogue states would purchase (in your currency of choice). To fund construction, shares could be offered to Iranian children, with Iceland’s geothermal energy resources naturally providing collateral for the loans to purchase those shares. A win-win-win solution.

  • alda November 9, 2009, 9:03 pm

    James for mayor!!!

  • Bromley86 November 9, 2009, 11:00 pm

    >The EU needs both Iceland, the Faroes and Greenland to get a significant place at the Arctic Warming Table. Russia, Canada and the USA will want to carve it up between them.

    Not convinced that this is true. The EU needs Norway and Demark (for the moment, may change to Greenland in the future), but Iceland and the Faroes are pretty-much not involved as far as the Arctic goes.

    Link to a pdf map showing why this appears to me to be the case: