Electricity security in a hydro-based electric power system : the particular case of Iceland

Abstract

Introduction: A secure energy system can be defined as one that is "evolving over time with an adequate capacity to absorb adverse uncertain events, so that it is able to continue satisfying the energy service needs of its intended users with 'acceptable' changes in their amount and prices" (Lombardi & Toniolo, 2015). Access to a secure electricity supply is essential for a good standard of living in a modern society. Electricity outages can have severe impact on business, schools, homes, financial loss, telecommunications, as well as lead to public safety incidences. For example, the two day-long power outage starting on August 14, 2003 across several northeastern states in the United States of America (US) and parts of Ontario, Canada led to around 50 million US residents losing power as well as an estimated economic loss of around $6.4 billion (Anderson & Geckil, 2003). This number includes lost earnings for investors and worker wages, losses due to spoiled goods or wastage for consumers and industry, and the additional cost to government agencies and tax payers for emergency services and additional police staff (Anderson & Geckil, 2003). Similarly, a substation failure on January 2, 2001 led to the collapse of the entire northern grid in India and blackouts for over 12 hours. Around 250 million people were affected and losses to businesses were estimated at around $107.1 million (Hreinsson, 2016a). Another major blackout on July 30-31, 2012 in northern India due to weak infrastructure and overloading of transmission lines led to 600 million people temporarily having no electricity supply, and resulted in major disruptions in the transportation system, healthcare system, businesses, and even stranded coal miners (BRIEF, 2012). The International Energy Agency (IEA) and European Union (EU) estimate that EU countries need to invest Euro 1 trillion from 2012 to 2020 and an additional Euro 3 trillion till 2050 to ensure adequate electrical capacity (IEA, 2007). In the case of Iceland, the country has very unique characteristics. Almost 100% of its electricity comes from renewable energy sources (primarily hydro and geothermal), and it has no nuclear, coal, or gas infrastructure. It is an isolated system with an independent transmission network that is disconnected from the rest of the world and hence cannot partake in electricity trade. In addition, Iceland has an ageing transmission network that frequently reaches its tolerance limits along with increasing load demands, especially from the ever growing energy-intensive industry. Finally, it is subject to severe weather conditions such as earthquakes and volcanic eruptions. Due to all these reasons, the country is concerned about how to ensure security of electricity supply in the long-term while maintaining its environmental goals (Hilmarsdottir, 2015).