Globalfields insight

Geothermal energy generation – Let’s shape political will towards genuine change

March 2023
Political will is critical. When faced with a massive crisis, things can change for the better.

Andreas Biermann

On a recent field trip to Iceland, Marta and myself had a fantastic opportunity to visit the On Energy geothermal plant exhibition at Hellisheiði, followed by a short trip to the boiling mud puddles at Hveradalir. It was an amazingly instructive day trip out of Reykjavik, even for someone like me with a long background in energy and electricity generation.

When I started my career as an energy analyst, in 1998, I visited a number of power stations around the United Kingdom in the course of my research. I ended up with bespoke tours of Hinkley Point B and the decommissioning Berkeley nuclear, Ironbridge, Ratcliffe-on-Soar and Longannet coal-fired and Barry and Ratcliffe-on-Soar combined cycle gas turbine CCGT power stations. More recently, I was closely involved in the design of the EBRD’s PLUTO geothermal risk mitigation facility in Turkey, the approval of the World Bank’s geothermal programme in Indonesia, and the negotiations for the IADB’s geothermal programme in the Caribbean. In other words, I understand the financial and engineering challenges of bringing geothermal power into reality reasonably well.

Nevertheless, I truly learned something today. From an educational perspective, the Hellisheiði exhibition was exceptionally well curated, with good levels of interaction, and impressive use of modern tech (download an app and then be able to listen to the various stations being explained). It was well laid out, in the centre of the station, affording close views of key elements of it, including both power turbines, heat exchangers, and other engineering kits, and finally, it was using a wide range of didactic methods, graphs, movies, timelines, interactive diagrams. 

Pictures credits: Marta Simonetti


The key takeaway for me was to see how much unused energy there is that we can sustainably access, and how much potential there is to reduce the use of fossil fuels by increasing renewable power generation. There is so much more we can do, and there are really no good reasons for not doing it. This isn’t just a question of economics and engineering, but more so one of political will.

Political will is critical. When faced with a crisis, things can be changed for the better. In the 1970s, when Iceland was facing high fuel costs on imported oil, a conscious decision was taken to move towards geothermal energy generation to ensure energy independence. On our way back from the country, we wrote about Iceland’s transition from being a heavy importer of oil to using almost 100% energy and heat from renewable energy sources.

While foreign direct investment, notably from other Nordic countries, was needed in order to realise the investment, this pioneering step forward would have not happened without the right leadership steering the country away from a crisis of energy and of a balance of payment. This is an important lesson that can be translated into action to bring positive solutions to the current climate crisis.

Looking at the specific context where I am standing now, the United Kingdom, why not start with the obvious measures? An Iceland-UK electricity interconnector has been discussed for a long time. An additional 1 GW of clean base-load would be very helpful to the UK’s energy transition and to reduce power-sector emissions in the UK and (through the other interconnectors) North-West Europe.  There is no technical reason for it not to happen, even though there are strong political objections, namely reluctance in Iceland about the potential effects on power prices in the country.

The benefit of an interconnector would be access to practically CO2-free baseload power, which could complement the increasing amount of non-dispatchable generation from wind and solar in the UK. It would directly replace gas power and reduce the need for building up nuclear power. Besides allowing the UK to access clean base-loadpower, it would generate stable export revenue and jobs in Iceland, and it would enable both countries to keep contributing to combatting the climate crisis. The issue of increased generation cost in Iceland could be addressed by ringfencing geothermal generation destined for export from the Icelandic power markets. Since it would generate continuously for export, as base load, this would not affect the economics of the additional generators.


At GBP 2 billion, an Icelandic interconnector project is not expensive, compared to the expected cost for the construction of the Hinkley Point C and Sizewell B nuclear reactors at GBP 25-33 billion. The supply cost of geothermal in Iceland is about GBP 54/MWh for industrial consumers, less than half the strike price for Hinkley Point C, and lower also than the contracts-for-differences prices for offshore wind. The investment cost for new geothermal in Iceland is likely to be half or less than half of the cost of Hinkley Point C per kW of generating capacity.

 The economic and environmental benefits of linking Iceland to the European power network through a UK interconnector are strong. Remaining concerns, such as on price, can be addressed, if, and that is a big if, there is political will similar to that shown by the Icelandic government over 50 years ago.

We need to put this in the context of the recently published IPCC Synthesis Report for the SixthAssessment Report which reiterated the interdependence of the climate, ecosystems, biodiversity, and human societies and called to massively fast-track climate efforts by every country, in all sectors, starting now.



Get started with Globalfields today
Contact us