The “Icelink” could bring 1.2GW of renewable power capacity – geothermal and hydro – to the UK by 2023. At this early stage, the price remains uncertain, but Bloomberg New Energy Finance’s central estimate of £86/MWh ranks it cheaper than new nuclear. Icelandic energy company Landsvirkjun have made a “best guess” of £107/MWh, which puts it closer to coal-to-biomass conversion. By any analysis, it is expected to come in cheaper than offshore wind power.
With an estimated £4 billion price tag, the interconnector and related generation investments present a major economic opportunity for Iceland. However, there are concerns exposure to the UK market could push up the price for Icelandic households and industries that benefit from the glut of cheap, green power.
Hörður Arnason, chief executive of Landsvirkjun, said at a summit in November the scheme needs political consensus to work, or it becomes too risky.
The parliamentary Industrial Affairs Committee did not endorse or oppose the interconnector, but recommended further analytical work start “as soon as possible”.