Iceland's clean energy lures metal companies from abroad

The country's long running effort to entice industry to come and use its 100 percent "renewable" electricity is picking up steam.
Written by Mark Halper, Contributor


Geothermal Station Reykjanes Iceland Christian Bickel Wiki.jpg
It's elementary my dear metal makers: Iceland's electricity comes straight from three of the four classic elements - the water of hydroelectric and the earth and fire of geothermal, like the plant above in Reykjanes. The country is enticing silicon producers with the "green" aspect and with competitive long-term power deals.
There is no country with cleaner electricity than Iceland's. It generates 100 percent from "renewable" sources - nearly three quarters from hydro and the rest from geothermal.

With that as a lure, it has been trying to entice industry from abroad to green up by locating on the sparsely populated, windswept North Atlantic island. Ever since the country's banking collapse in 2008, Iceland has not only promoted low carbon power, but its utilities have also offered another energy bait: Competitive, long-term contracts in which prices hold steady for over a dozen years, something that is unheard of with volatile fossil fuel energy.

The world hasn't exactly beaten a path to Reykjavik's door over the last five or six years, but things could be picking up now. In the last few weeks, not one, but two European metal manufacturers have signed deals to make silicon in Iceland.

Two weeks ago, United Silicon, a new venture jointly owned by a group of European silicon companies, committed to building a metallurgical grade silicon plant in Keflavik on Iceland's southwest coast. United Silicon had also evaluated sites in the Middle East and Malaysia but chose Iceland in large measure because of a power contract that Iceland's largest and state-owned utility, Landsvirkjun, offered, according to Electric Energy Online.

"We have enjoyed working with Landsvirkjun to achieve the important power contract we signed today (March 19), which really enabled us to make the final decision," United board member Joseph Dignam said.

At around the same time, German conglomerate PCC SE took a big step forward in its plans to build a silicon metals plant in Bakki, near Husavik on Iceland's northeast coast when it signed a new power purchase agreement with Landsvirkjun, IceNews reported

The energy intensive  PCC BakkiSilicon facility will include two high temperature electric arc furnaces to convert raw materials including quartzite from a PCC Polish mine into silicon, according to a video released about a year ago when Iceland's Parliament passed laws supporting the arrangement.

The story did not provide details of the new power agreement, which seems to replace an earlier contract between the two companies. In the year-old video, PCC chairman and owner Waldemar Pruessner said that his company had secured stable electricity prices for 10 to 15 years.

Even though Iceland has decades of experience hosting foreign aluminum manufacturers, it has not had an easy time trying to land new industrial operations. As I wrote in early 2011 for TIME Magazine, it had landed a commitment from U.S. company Globe Specialty Metals (then based in New York, now in Miami) to build a silicon plant. Globe announced the deal about a month later, only to back out the following year.

Prior to last month's deals with United and PCC, Iceland has had some successes with other industries.

London-based data hosting company Verne Global, for example, has converted a former NATO naval base in Keflavik into a humming data center serving international customers including German carmaker BMW. Not only has Verne secured a favorable, long term energy deal to power its stable of servers, but it has all but eliminated the electricity to cool them. Refrigeration is normally a huge portion of data center costs, but Verne takes advantage of the relatively temperate climate in Iceland - the average temperature ranges from around 32 degrees F to around 56 degrees F - so that nature handles most of the job.

Now, foreign investors will come to Iceland to cleanly manufacture and export silicon that the world needs for electronics, solar panels and other products. United hopes to complete its plant by 2016, and PCC by 2017.

No telling who might arrive next. Iceland has been talking with China, and the two countries recently struck a free trade deal

Any increase in industrial activity typically faces opposition from a strong environmental movement in Iceland, so don't expect runaway growth. And fierce local loyalties within the country can also lead to clashes that slow down economic development. One mega project to build a sub-Atlantic cable that would send clean electricity to Europe faces opposition from different quarters, for example.

Then there are those volcanoes that might keep a few potential customers away. And oh, yes, the weather. It's nowhere near as bad as the country's unfortunate name suggests, but reputations die hard. In fact, with  moderate temperatures (okay, the wind is strong), hot springs, plenty of open space, and a world class international city in Reykjavik, Iceland has plenty of appeal.

All in a land with all that reasonably priced and renewable energy (renewable generation costs much more in countries like, say, Germany and the U.S. where it is much newer than in Iceland). Renewable, that is, until the glaciers melt enough to deprive the hydroelectric plants. 

By then - possibly as soon as 150 years from now - the country will have added more geothermal facilities. And the world might cracked fusion power  - you might be surprised at who's working on it - and all those other innovative nuclear ideas! 

But between now and that time, a fiery country in the North Atlantic could step up as a significant, low carbon engine room to the world. 

Photo is from Christian Bickel via Wikimedia

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