The local heating utility company in Höfn in eastern Iceland has officially launched its new geothermal district heating system to ensure the long-term and safe heating supply of the local city government.
90% of Iceland's homes are heated by geothermal heat, so it is assumed that the whole of Iceland basically benefits from access to affordable green heating. However, some areas of the country have not been able to use geothermal heat until recently, and the impact of replacing electric heating with geothermal heat is profound.
At the end of last month, Iceland’s official energy company Rarik reported on its work on the geothermal district heating network in Höfn, eastern Iceland.
In recent decades, Höfn has operated a heating station and an electric district heating distribution system. The town has ¾ houses connected to utilities. These houses use unsafe electricity but use oil as a backup to heat the utility distribution system. In recent years, the price of unsecured electricity has risen sharply, and there is great uncertainty in the supply. Therefore, the prerequisites for unchanged operation of district heating facilities no longer exist.
Hitaveita Hornafjardar (the local district heating utility company) is owned by RARIK, which has invested a lot of work and money in finding hot water in recent years. Since the 1990s, East Skaftafellssýsla has been searching for geothermal energy in an organized manner. A total of 54 research wells and 5 production wells between 1,100 and 1,750 meters deep have been drilled on Hoffell's land. From 1992 to 2002, the Hornafjördur municipal government and the National Energy Administration paid for geothermal exploration, but RARIK participated in the project in 2002. Until 2006, 33 exploratory wells were drilled, but after RARIK acquired Hoffell's geothermal rights in 2012, another 21 wells were drilled and 5 production wells were designated.
30 to 95 seconds/liter 70-78 degree hot water
RARIK CEO Tryggvi Thór Haraldsson celebrated the end of his work in a speech today at the official opening of Höfn's new district heating system. He said that this is a large and successful project, and in RARIK's view, it is entirely possible that it will be an important step forward for the settlement of Hornafjördur. In his case, it is said that the results of drilling production wells in Hoffell were better than expected, but now the district heating company has four production wells available. Three of them are already activated, and one can be activated later. It is estimated that the peak load of the entire area is 95 liters/sec in a short time, but about 30-40 liters/sec in a long time. Normally, one well is sufficient for district heating, but at peak load there are two wells, then one spare, and the other is out of service. When entering Höfn's water distribution system, the water temperature is 70 degrees at the lowest load and 78 degrees at the highest load. Tryggvi said the scientists’ assessment is that Hoffell’s geothermal area and installed systems can support a significant expansion of settlements or an increase in the number of users.
Cost 3.5 billion ISK (approximately 27 million US dollars)
In the case of Tryggvi Thór, the cost of RARIK's geothermal power generation was also mentioned, which covered 20 kilometers. The total development of the main pipeline and power distribution system from the Hoffell power plant area to Hafnar is approximately 3.5 billion Iceland Krona. He said that it is assumed that the cost of the new district heating system users will be similar to the situation in the first year of the old district heating utility, but when the project's maximum financial cost is reduced, there are all reasons to lower the price. In the long run, it becomes very cost-effective.
State participation is a prerequisite for efficiency
Tryggvi Thór said that a prerequisite for a cost-effective new district heating system is that comparable funds come from the national treasury for projects and other new district heating systems. There, the Ministry of Finance provided a 16-year electric heating subsidy for those connected to district heating, as well as a subsidy for direct electric heating. In addition, residents of central heating enjoy a one-time heating subsidy. Tryggvi Þór said that it is expected that residents who receive electricity and heating subsidies will receive about 35% of the subsidy for 16 years, up to the cost of house renovation, and utility companies will receive 65%. He thanked the government for participating in the project with the initial research grant and one-off grant.
30 years of searches finally have results
“The introduction of district heating in Hornafjördur is a very important step forward. We have been engaged in geothermal exploration for about 30 years and finally achieved results,” said Höfn Mayor Matthildur Ásmundardóttir. She said that the cost of residents will not drop significantly in the first few years, but they hope that in the long run, the cost of central heating will be more efficient. However, the company will immediately experience changes that have a positive impact on its operations. “The cooperation with RARIK employees during the construction period was very good, and I would like to take this opportunity to thank them for their good cooperation,” Matthildur said.
The state’s donation just exceeded 1 billion Iceland Krona (approximately US$1.7 million)
Benedikt Árnason, Director of the Industry and Innovation Department, represented the department this time. He said that Hornafjördur's district heating project is fully in line with the government's emphasis on national district heating in recent years and decades. Compared with electricity or petroleum heating, the macroeconomic efficiency of district heating will be fully demonstrated. He said that due to the lack of artisans, the ministry will give users extra time to use central heating, so they do not need to leave subsidies for 9 months after connecting to central heating. He said that it is estimated that the amount of the state’s one-time payment instead of subsidizing the new district heating system in Höfn and surrounding areas will exceed 1 billion Iceland Krona, with a balance of approximately 500 million Iceland Krona.
Many people have invested in the project
In addition to RARIK employees, a total of 40 contractors and suppliers participated in the project. These include: