A German economist claims there is great uncertainty regarding the profitability of connecting Iceland’s energy grid to that of the UK by laying a submarine cable between the two countries, RÚV reports. He believes it’s too early to tell what impact such a project would have on the price of electricity to Icelandic homes.
David Bothe is an economist and consultant on energy issues. He points out that before the profitability of the project can be assessed, it must be clear how the electricity will be used. “Is it about selling green energy to Europe or about purchasing cheap energy from Europe and selling it when prices are high?” he asks.
Prime Ministers Sigmundur Davíð Gunnlaugsson and David Cameron recently announced the creation of a task force to look into the feasibility of laying such a cable. That announcement sparked discussion about the project which has met with harsh criticism from environmentalist, most notably musician Björk and writer Andri Snær Magnason, who have pointed out it cannot be done without adding numerous dams and power plants in our highlands.
Bothe mentions that laying a submarine cable takes up to six years, during which time the energy market can change dramatically. He says energy prices in Europe now are low, since most customers want energy from renewable sources. By connecting to another energy grid through a submarine cable, the purchasing price of energy usually goes up, he claims. Whether that price affects the consumer depends on taxes, subsidies and fees for the energy grid.