Skúli ThóroddsenLegal Adviser
National Energy Authority of Iceland
Legal & Policy Framework for Geothermal Development
The Icelandic National Energy Authority• Advises the government on energy resources and related issues. • In charge of administration of energy issues, and directs research
on energy resources in Iceland.• Grants licenses for research and exploitation of energy, mineral
resources and hydrocarbons. • Collects and disseminates data on energy and other earth
resources, their utilization, and capacity. • Develops long-term scenarios for Iceland's future energy needs and
energy production. • Executes all administrative functions as assigned under the Natural
Resources Act, the Electrical Energy Act, and other energy-related statutes.
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Geothermal Fields in Iceland
Tavg = 0°C (january) to 10°C (july) in Reykjavík
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Initial use of geothermal heat and electricity
• During Reykjavik’s first 1000 years geothermal heat was primarily used for washing, bathing and cooking.
• The first uses of geothermal energy to heat houses can be traced back to a farmer in 1908 who led a pipe to his farm.
• Extensive distribution of hot water for heating homes began in 1930 in the capital area.
• The first hydropower turbine began operation in 1904.
A borehole at Sudurreykir. The houses in the background are the ones first heated with geothermal water in Iceland in 1908.
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Oil Crisis Changes National Policy
• When the oil crisis struck in the early 1970s, the world market price for crude oil rose by 70%.
• Heat from oil served over 50% of the population.
• In order to reduce the effect of rising oil prices, Iceland began subsidizing those who used oil for space heating.
• The oil crises in caused Iceland to change its policy, deemphasizing oil, turning to domestic energy resources, hydropower and geothermal heat. Space Heating in Iceland from 1970-2008.
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Why so successful?
• No private developers willing to fund• The National Energy Fund (NEF) provided risk insurance:
– NEF would reimburse up to 80% of cost of unsuccessful drillings.
– Later on it included grant support for geothermal development, mainly for exploratory activities.
• During the first three decades of geothermal development in the country, the NEF played a critical role in mitigating the exploration and drilling risks, thereby leaving project developers with minimal risk.
• Reservoir-risk insurance schemes reduce the need for equity through partial coverage of costs should the project become uneconomical and thus can proof to be an important means to reduce geothermal development costs.
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Comparison of energy prices for residential heating
• Geothermal power and heat is cost competitive with large hydro in Iceland and is not subsidised
• Direct oil and electrical heating is subsidized in Iceland for regional purposes
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Avoided cost by harnessing a domestic source of energy
Savings in 2008 equivalent to 91% of the total imports of refined oil products.
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Primary Energy Use 1940-2010
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Highlights for 2011• All stationary energy is renewable• 86% of primary energy is renewable
– Geothermal contributes 66% of primary energy (156 PJ)– Highest ratio in OECD - and probably in the world
• Oil still needed for 14% of the primary energy demand– About half to operate the fishing fleet– The other half mainly for motor vehicles
• Electricity generation amounted to 17.2 TWh– Hydro power plants 73%– Geothermal power plants 27%– 77% to the power intensive industry
• 90% of houses heated with geothermal energy,9% with electricity and less than 1% with oil
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Geothermal Energy Utilisation Sectoral Share
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Legal framework in Iceland• The ownership of resources in the ground is associated to private
land
• On public land resources in the ground are the property of the State of Iceland, unless others can prove their right of ownership.
• Even though the ownership of resources is based on the ownership of land, research and utilisation is subject to licensing according to:– Act on Survey and Utilisation of Ground Resources, No. 57/1998 – Electricity Act, No. 65/2003
• Survey, utilisation and other development pursuant to these Acts are also subject to the:– Nature Conservation Act– Planning and Building Act– Environmental Impact Assessment Act– Other acts relating to the survey and utilisation of land and land benefits.
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Act on Survey and Utilisation of Ground ResourcesThe Act on Survey and Utilisation of Ground Resources covers resources in the ground, at the bottom of rivers and lakes and at the bottom of the sea within netting limits. The Act also covers surveys of hydropower for the generation of electricity.
Electricity ActAccording to the Electricity Act a licence issued by the NEA is required to construct and operate a power plant. However, such a licence is not required for power plants with a rated capacity of less than 1 MW, unless the energy produced is delivered into the distribution system of a distribution system operator or into the national transmission grid.
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Role of the National Energy Authority (1/2)
• Contracts and conducts research in the field of energy
• Accumulates and maintains databases on the energy resources
• Disseminates knowledge on energy sources and utilization
• Administers energy affairs and advises the minister
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Role of theNational Energy Authority (2/2)
– Grants licences for research and utilisation of energy resources• Ownership of resources is based on the ownership of land• However research and utilisation is subject to licencing• Subject to the Act on research and utilization of natural
resources.– Grants licences for Power Development (to construct
and operate a power plant)• All power stations >= 1 MW and/or will be connected to the
grid• Subject to Electricity Act
– Is the official monitoring body
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Official monitoring
National Energy Authority is the official licensing and monitoring authority for research, utilisation and power plant licenses.
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Master Plan for hydro and geothermal energy resources in Iceland
• Parliament started the work in 1997• Proposed power projects are
evaluated and on the basis of:– Environmental impact– Social impact– Economical impact
• Projects are then categorized– To be developed– To be protected– To be considered
• Has been presented to the Parliament for legislation
PotentialPower
Hydro TWh/a
Geoth. TWh/a*
Existing 13 5 26%
To be developed 3 10 20%
To be protected 8 18 39%
To be considered 6 3 14%
Total 31 35
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50 MW100 MW200 MW
Geothermal Power Plants to be developed
National Energy Authority, Kristinn Einarsson, September 2011
ExistingTo be developed
100 MW200 MW
50 MW
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ConclusionGeothermal energy plays an important role in providing the nation with clean and reliable energy and is fundamental to the Icelandic economy as well as Icelandic welfare and independence.
Master Plan a road map to further development in Iceland
The legal framework itself is extensive and counting derivative regulations the law on the matter is vast. Some of the legislation is recent while other branches are long-standing.
Effective policy making and official monitoring of geothermal development for sustaining a renewable energy society in Iceland is crucial for sustaining a long-term lifespan of the resource.
A solid policy framework should support geothermal deployment.
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United Nations UniversityGeothermal Training Programmeis hosted at
Orkustofnun – National Energy Authority• has operated in Iceland since 1979• aims at assisting developing countries with significant
geothermal potential to build up or strengthen groups of specialists that cover most aspects of geothermal exploration and development
• offers annually six month specialised courses for professionals in geothermal work
• MSc and PhD programmes in cooperation with the University of Iceland
• short courses for geothermal professionals in Africa, Asia and Central America
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Candidates and Fellowships• Selected by personal interviews in their home country by
UNU-GTP representatives
Candidates must have:• A university degree in science or engineering• A permanent position at energy company or research institution • A minimum of one year practical experience in geothermal work• Under 40 years in ageFellowships:• Fellowships are awarded to candidates from developing countries
and some Central and Eastern European countries• Financed by the Government of Iceland and UNU
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WEEK
GeologicalExploration
BoreholeGeology
Geophysical
ExplorationBorehole
GeophysicsReservoir
EngineeringEnvironmental
StudiesChemistry of
Thermal Fluids
GeothermalUtilization
DrillingTechnology
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Introductory Lecture CourseAll main aspects of geothermal energy, exploration, and utilization
Practicals and short field excursions
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6Field Geology
Maps and photos
Structural Analysis
Hydrogeology
DrillingPetrological
loggingAlteration
Mineralogy
Resistivity methodsThermal methods
MagneticsGravity
Course on well logging andreservoir engineering
including logging and well testing, reservoir physics and stimulation,
tracer tests, and computer programs
EIA planningChemistryPhysicsBiology
RevegetationHealth & safety
Sampling of fluids and gasScaling and corrosion Drilling equip. &
proceduresWell design
SafetyManagement
Rig operations
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8Analytical methodsThermodynamicsGeothermometers
Heat transfer & fluid flow
Control systems9
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11Excursion to the main geothermal fields of Iceland
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13 Field work in deeply eroded
strata
Aquifermodelling
Data processingtechniques
Logging methods
Data eval.
Responses to exploitation
Gas dispersion and abatement
Water rockinteraction
Design of plants and systems
Cementing Completion14
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LINES OF TRAINING AND TIME SCHEDULE
UNU-gtp Fellows in Iceland1979-2011
Kenya 45
Tanzania 5Burundi 1
Romania 5
Greece 3
Egypt 4 Jordan 6
Mongolia 9
Mexico 6
China 72
Russia 9
Philippines 31
Indonesia 24
Turkey 10
Thailand 5
Ethiopia 26
Poland 14
Honduras 2
Uganda 13
Eritrea 6 Djibouti 5
Vietnam 5
Latvia 1Lithuania 2
Slovakia 2 Ukraine 2
Georgia 1Iran 20
Pakistan 4
Nepal 2
Algeria 4Tunisia 6
Macedonia 1
Serbia 3
Nicaragua 8
Costa Rica 16El Salvador 28
Guatemala 3
Bulgaria 5Azerbaijan 1Albania 2
Yemen 3
Rwanda3
Zambia 1
Kenya 62
Tanzania 7Burundi 1
Romania 5
Greece 3Egypt 4 Jordan 6
Mongolia 11
Mexico 7
China 78
Russia 9
Philippines 31
Indonesia 29
Turkey 10
Thailand 5Ethiopia 27
Poland 14
Honduras 3
Uganda 14
Eritrea 7Djibouti 6
Vietnam 5
Latvia 1Lithuania 2
Slovakia 2Ukraine 2
Georgia 1
Iran 21
Pakistan 4Nepal 2
Algeria 4
Tunisia 6
Macedonia 1Serbia 3
Nicaragua 11
Costa Rica 18El Salvador 32
Guatemala 3
Bulgaria 5
Azerbaijan 1Albania 2
Yemen 4
Rwanda 5
Zambia 1
Comoros 1
Dominica 1Nevis 1
Morocco 1
Sri Lanka 1
Bangladesh 2
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Participation in UNU-GTP
• 482 scientists and engineers from 50 countries have completed the 6 month specialized course
• Thereof 89 women (18%)
• MSc programme offered with University of Iceland since 2000 - 28 graduates
• PhD programme offered with UI from 2008
1979 - 2011Central & Eastern Europe 13%
Central America 16%
Africa 30%
Asia41%
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ICELANDIC GOVERNMENT CONTRIBUTION TO UNU 1979-2011
UNU Geothermal UNU Fisheries UNU Land Restoration
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Takk fyrir
Skúli Thoroddsen <[email protected]> 27