Solar energy will become a competitive choice in the energy market

A special effort could be made to put in place incentives for individuals and companies to install solar panels, as has been done in many of our neighboring countries.

This is what a report from the working group on alternative energy options states but the report was published this week.

The group expects that solar energy will become a competitive choice for electricity generation in Iceland within three to five years, alongside price increases for electricity and decreasing prices for solar cells, along with technological advances regarding the efficiency of solar cells.

“The research is a proven technology which has been successfully used in other countries. The working group believes that the use of solar energy can increase energy production in Iceland somewhat and considers it important to develop policies and frameworks for such use, to review legislation and consider incentives for increased use,” the working group concluded.

400 gigawatts-hours

The aim should be to reach 400 gigawatt-hours of annual solar energy production by 2040, which is about 2% of 2022’s energy consumption. Of these 400 gigawatt-hours, about half are expected to be produced by households, companies, and institutions. The other half will come from larger solar power plants, as has been the case in many other countries.

The working group does not consider it unrealistic to assume that solar cells will reach a 10-20% capacity in Iceland by 2040 and could produce at least 200 gigawatt hours per year.

Number of solar plants in the vicinity of Iceland

It is estimated that every one and a half hours, enough sunlight falls on the Earth to produce energy that can meet the world’s energy needs for a year. The International Energy Agency (IEA) predicts that by 2027, installed solar power in the world will triple from 2022, and around 22% of global electricity production will come from solar power.

The report notes that several solar plants have been installed in northern areas close to Iceland in the past years. Denmark and Sweden both have installed more than 2,500 MW of solar power in 2022, Finland nearly 600 MW, and Norway about 320 MW.

It also shows that the installation of solar cells on rooftops, which are also connected to the electricity distribution system, has become technically simple. In many other countries, solar cells can be bought simply in stores such as IKEA.

Over a million ISK per house

“It can be roughly estimated that 10 kW solar panels installed in a house in Iceland cost over one million ISK, but such panels should last more than 20 years, as it is common to sell them with a 25-year guarantee from manufacturers. The annual production in Iceland for 10 kW solar panels on a conventional roof could be around 5-10 thousand kW, meaning the repayment time would be rather long with sales into the distribution system. However, if the production would all go to its use, i.e. savings in electricity purchases, which would be 15-20 ISK/kW (depending on the sale and the distributor), then the repayment time could be acceptable in some cases,” the report also states.

However, it is assumed that individuals and companies will see an advantage in investing in solar cells to produce their energy, for example, for environmental reasons or as part of marketing, although it will not be financially beneficial until after a long period.