Iceland Solar Report

Discover comprehensive insights into the statistics, market trends, and growth potential surrounding the solar panel manufacturing industry in Iceland

  1. Weather and Climate (n.d.). Average Monthly Sunshine hours in Reykjavík. Retrieved November 6, 2024, from https://weather-and-climate.com/average-monthly-hours-Sunshine,Reykjavik,Iceland
  2. Profile Solar (n.d.). Solar PV Analysis of Reykjavik, Iceland. Retrieved November 6, 2024, from https://profilesolar.com/locations/Iceland/Reykjavik/
  3. Global Petrol prices (2024, March). Iceland electricity prices. Retrieved November 6, 2024, from https://www.globalpetrolprices.com/Iceland/electricity_prices/
  4. Askja Energy (n.d.). The Icelandic TSO. Retrieved November 6, 2024, from https://askjaenergy.com/transmission/iceland-electricity-tso/
  5. Pollý Hilmarsdóttir (2015, June). Electricity Security in Iceland. Retrieved November 6, 2024, from https://skemman.is/bitstream/1946/20893/1/PollyH_Electricity_Security.pdf
  6. International Renewable Energy Agency (2024). Renewable energy statistics 2024. Retrieved November 6, 2024, from https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2024/Jul/IRENA_Renewable_Energy_Statistics_2024.pdf
  7. Iceland Monitor (2024, May 3). Solar energy will become a competitive choice in the energy market. Retrieved November 6, 2024, from https://icelandmonitor.mbl.is/news/news/2024/05/03/solar_energy_will_become_a_competitive_choice_in_th/
  8. Universe Space Tech (2024, October 25). Space power plant will provide Iceland with solar energy. Retrieved November 6, 2024, from https://universemagazine.com/en/space-power-plant-will-provide-iceland-with-solar-energy/
  9. Think Geo Energy (2011, November 25). Iceland offers geothermal power at $4.3 cents per kWh. Retrieved November 6, 2024, from https://www.thinkgeoenergy.com/iceland-offers-geothermal-power-at-43-cents-per-kwh/
  10. Birgir Freyr Ragnarsson (2014). Wind energy potential assessment & cost analysis of a wind power generation system at Búrfell. Retrieved November 6, 2024, from https://skemman.is/bitstream/1946/18651/1/Birgir_Freyr_Ragnarsson_MSc_2014.pdf
  11. PV Magazine (2024, October 29). Space Solar secures letter of intent from Reykjavik Energy. Retrieved November 6, 2024, from https://www.pv-magazine.com/2024/10/29/space-solar-secures-letter-of-intent-from-reykjavik-energy/
  12. Statista (2023, September). Main sources of electricity generation in Iceland in 2022. Retrieved November 6, 2024, from https://www.statista.com/statistics/1192014/iceland-electricity-generation-by-source/
  13. Wikipedia (n.d.). Energy in Iceland. Retrieved November 6, 2024, from https://en.wikipedia.org/wiki/Energy_in_Iceland
  14. Rarik (n.d.). Notifications – Power outages. Retrieved November 6, 2024, from https://www.rarik.is/tilkynningar
  15. Orkustofnun (2024, June 27). Applications for solar cell grants. Retrieved November 6, 2024, from https://orkustofnun.is/en/information/individuals
  16. Iceland Monitor (2024, October 24). Iceland could be a reception site for solar power plants in space. Retrieved November 6, 2024, from https://icelandmonitor.mbl.is/news/news/2024/10/19/iceland_could_be_a_reception_site_for_solar_power_p/
  17. Open Infra Map (n.d.). Power plants in Iceland by source. Retrieved November 6, 2024, from https://openinframap.org/stats/area/Iceland
  18. PV know-how (2024, August 2). Iceland Subsidises Solar Panel Installation Costs. Retrieved November 6, 2024, from https://www.pvknowhow.com/iceland-subsidies-solar-panel-installation-costs/
  19. Nordic Roads (2023, September 7). Greener Lighthouses. Retrieved November 6, 2024, from https://nordicroads.com/greener-lighthouses/
  20. World Energy Council (2024, June). Island. Retrieved November 6, 2024, from https://www.worldenergy.org/assets/downloads/Issues_Monitor_2024_Iceland_commentary.pdf
  21. Ministry of the Environment, Energy and Climate (2022, March). The State and Challenges of Energy Affairs. https://www.stjornarradid.is/library/02-Rit–skyrslur-og-skrar/URN/URN_State_of_Energy_Issues_EN_Web.pdf
  22. Time Camp (n.d.). Average Salary in Iceland. Retrieved November 6, 2024, from https://www.timecamp.com/average-salary/iceland/
  23. Salary Explorer (n.d.). Solar Engineer Average Salary in Iceland 2024. Retrieved November 6, 2024, from https://www.salaryexplorer.com/average-salary-wage-comparison-iceland-solar-engineer-c99j11250
  24. World salaries (n.d.). Average Solar Photovoltaic Installer Salary in Iceland for 2024. Retrieved November 6, 2024, from https://worldsalaries.com/average-solar-photovoltaic-installer-salary-in-iceland/
  25. World salaries (n.d.). Solar Energy Installation Manager Average Salary in Iceland 2024. Retrieved November 6, 2024, from https://www.salaryexplorer.com/average-salary-wage-comparison-iceland-solar-energy-installation-manager-c99j12677
  26. Worldometers (n.d.). Iceland population. Retrieved November 6, 2024, from https://www.worldometers.info/world-population/iceland-population/
  27. Facebook group – Rent rent rent Iceland (2023, November). Live/Work Space for rent in Garðabær. Retrieved November 6, 2024, from https://www.facebook.com/groups/941646643704324/search/?q=warehouse
  28. Veitur (n.d.). Rates. Retrieved November 6, 2024, from https://www.veitur.is/verdskrar
  29. Instant offices (n.d.). Office space in Reykjavik. Retrieved November 6, 2024, from https://www.instantoffices.com/en/is/available-office-space/reykjavik/hallgerdargata-111713?type=1
  30. Statista (2024, September). Non-life insurances – Iceland. Retrieved November 6, 2024, from https://www.statista.com/outlook/fmo/insurances/non-life-insurances/iceland
  31. Advanced Energy Technologies (2023). Energy industry in Iceland. Retrieved November 6, 2024, from https://aenert.com/countries/europe/energy-industry-in-iceland/
  32. Government of Iceland (n.d.). Ministry of the environment٫ energy and climate. Retrieved November 6, 2024, from https://www.government.is/topics/business-and-industry/energy/
  33. Our future energy (n.d.). Iceland. Retrieved November 6, 2024, from https://ourfuture.energy/energy-mix/iceland/
  34. Visit Iceland (n.d.). Iceland is a leader in renewable energy. Retrieved November 6, 2024, from https://www.visiticeland.com/article/renewable-energy
  35. Government of Iceland (n.d.). Electricity Act. Retrieved November 6, 2024, from https://www.government.is/media/atvinnuvegaraduneyti-media/media/acts/Act-No-65-2003-on-Electricity.pdf
  36. De Gruyter (2024, June 11). Obligations for owners to climate-proof buildings in Iceland. Retrieved November 6, 2024, from https://www.degruyter.com/document/doi/10.1515/eplj-2024-0006/html
  37. Ministry of Industries and Innovation (2009, June 30). The Icelandic National Renewable Energy Action Plan. Retrieved November 6, 2024, from https://energy.ec.europa.eu/document/download/7b6e89ad-9e3b-474f-80d0-3ea5bd03b404_en?filename=dir_2009_0028_action_plan_iceland__nreap.pdf
  38. Arctic portal (2024, May 2). Great possibilities to improve energy use and energy procurement in Iceland – New report issued for the Ministry of the Environment, Energy and Climate. Retrieved November 6, 2024, from https://arcticportal.org/ap-library/news/3561-great-possibilities-to-improve-energy-use-and-energy-procurement-in-iceland-new-report-issued-for-the-ministry-of-the-environment-energy-and-climate
  39. PV Know how (2024, August 2). Iceland subsidies solar panel installation costs. Retrieved November 6, 2024, from https://www.pvknowhow.com/iceland-subsidies-solar-panel-installation-costs/
  40. Space Solar (2024, October 23). Space Solar and Transition Labs to deliver space-based solar power to Iceland by 2030. Retrieved November 6, 2024, from https://www.spacesolar.co.uk/space-solar-and-transition-labs-to-deliver-space-based-solar-power-to-iceland-by-2030/

Key points

  • All figures have been converted into USD

Yearly sunshine (sun hours per year)

The total annual sunshine hours for Reykjavík, the capital, averages around 1,330 hours, with May being the sunniest month with 201 hours of sunshine.1

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kWh per kWp installed

The annual average generation per unit of installed PV capacity in Iceland is 881.5 kWh/kWp.2

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Average cost per kWh from utility company

As of March 2024, the average cost of electricity in Iceland (including the costs of power, distribution and all applicable taxes and fees) is approximately $0.166 per kWh for residential consumers and $0.079 per kWh for business consumers.3

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Reliability of electrical power supply grid

The reliability of the electrical power supply grid in Iceland is generally regarded as highly reliable due to:45

  • Modern Infrastructure, with ongoing maintenance and upgrades to meet increasing demand. The transmission network spans approximately 3,200 km and includes 72 substations and 77 supply points, ensuring a robust framework for electricity distribution.

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  • System Operations and Monitoring – the grid operates under the management of Landsnet, which is responsible for maintaining a balance between power generation and consumption. The control center in Reykjavík monitors the system in real-time, ensuring operational security and quick responses to any deviations from normal operating parameters.

Despite its reliability, the Icelandic power grid faces challenges due to natural hazards such as volcanic activity, icing, and severe weather conditions. These factors can lead to outages, particularly during winter months when wet snow accumulation on power lines is common.

 

Detailed Information

  • All figures have been converted into USD

    • Total solar panel production capacity (installed)

    Total installed solar photovoltaic (PV) capacity in Iceland was approximately 7 MW.6

    Total solar panel production capacity (projected)

    The total projected solar panel production capacity in Iceland by 2040 is expected to be around 45.66 MW, primarily from a space-based solar power project.78

    Average costs of various electricity generation sources (coal, natural gas, solar, etc)

    91011

    • Geo-thermal power – 0.043 $/kWh
    • Hydro power – 0.043 $/kWh
    • Wind power – 0.0756- 0.0857 $/kWh
    • Solar power – 0.03 $/kWh

    Percentages of various electricity generation sources (coal, natural gas, solar, etc)

    In 2022, the electricity generation mix in Iceland was predominantly composed of renewable energy sources:1213

    • Hydropower: 70%
    • Geothermal Energy: 30%
    • Other Renewables (including wind and solar): Less than 1%

    Average daily availability of electricity from the national grid (measured in hours)

    The average daily availability of electricity from the national grid in Iceland is effectively 23.5-24 hours, with relatively low number of power outages evidenced locally.14

    Number of residential solar panel installations

    1315

    Nearly 90% of all Icelandic homes are heated via geothermal energy.

    While specific numbers for residential solar kit installations are unavailable, national subsidies exist for adopting solar energy, with priority given to non-utility users, those in rural areas, and residents in electrically heated homes.

    Total number of solar farms (installed and projected)

    1617

    Currently, there are no large-scale operational solar farms in Iceland.

    Iceland is planning significant advancements in solar energy, particularly through a partnership with the UK startup Space Solar. This initiative aims to launch a space-based solar power plant by 2030, capable of beaming 30 MW of electricity to Earth, enough to power approximately 3,000 homes.

    Off-grid market demand for solar panels (current and projected)

    71819

    As the cost of solar panels continues to decline and electricity prices rise, solar energy is expected to become a highly competitive option for electricity generation within the next three to five years. This shift is likely to drive more households and businesses to invest in solar technology, particularly for off-grid applications.

    The demand for solar energy is further fueled by the National Energy Authority (NEA) subsidy program, which specifically targets off-grid communities such as remote farms, small islands, and areas reliant on diesel power. This initiative aims to reduce energy costs while promoting sustainable, renewable energy solutions.

    In line with this trend, research shows that 44 of the 104 lighthouses operated by the Icelandic Road and Coastal Administration (IRCA) are already powered by solar cells and batteries. Additionally, three lighthouses use a hybrid system combining solar cells, batteries, and wind turbines.

    On-grid market demand for solar panels (current and projected)

    Interest in Iceland solar energy adoption is steadily growing, with projections indicating that by 2040, approximately half of Iceland’s anticipated 400 GWh of annual solar energy production will come from households and businesses, while the other half will be generated by larger solar power plants. However, Iceland currently lacks a formalized market for “prosumers”—individuals or companies that can sell excess solar energy back to the grid. The widespread adoption of on-grid solar energy systems in Iceland faces several key challenges:72021

    • Infrastructure Limitations: Expanding and ensuring the reliability of transmission grids, particularly in remote areas, is crucial. Upgrading existing infrastructure to integrate new solar sources presents both logistical and regulatory hurdles.
    • Capital Costs: The high upfront costs of solar installations can be a significant barrier. A typical 10 kW solar system, for example, can cost upwards of $72,186, meaning the repayment time would be rather long with sales into the distribution system.
    • Regulatory Framework: The complexity of the regulatory landscape and lengthy permitting processes can slow down project implementation, hindering the overall pace of solar energy adoption.

    Average monthly income of workers in solar industry (labor cost)

    • The average monthly salary in Iceland is approximately $5,500.22
    • Solar Engineer: the average monthly salary is approximately $4,504.23
    • Solar Energy System Installer: the average monthly salary is approximately $2,730.24
    • Solar Energy Installation Manager: the average monthly salary is approximately $6,157.25

    Population of the country

    The current population of Iceland is 395,107.26

    Average overhead costs of solar panel production (with a brief breakdown)

    Estimate for Factory Rent 27

    The average monthly rent prices for warehouse spaces in Iceland is approximately $20 per m2.

    Industrial Electricity Rates 3

    The average electricity price for businesses in Iceland is approximately $0.079 per kWh as of March 2024.

    Water Costs 28

    Water rates for businesses in Iceland vary based on consumption levels. As of the latest data:

    • Less than 1,000 m³: Approximately 0.013 $/m³.
    • 1,000 to 19,999 m³: About 0.0094 $/m³.
    • 20,000 to 249,999 m³: Roughly 0.0087 $/m³.
    • 250,000 m³ and above: Around 0.0076 $/m³.

    Salaries and Wages 232425

    Monthly salaries of workers in solar industry in Mauritania ranges from $300 to $700, depending on the position.

    Rent for Office Space 29

    The average monthly rent for office space in Reykjavik varies from approximately $562 – $1,687 for smaller offices (1-3 people) to $5,623 – $6,186 for medium offices (10 people).

    Insurance 30

    The average spending per capita for non-life insurance in Iceland is estimated to be $1,187.00 in 2024.

    A summary of the energy infrastructure

    Overall, Iceland’s energy infrastructure is robust, heavily reliant on renewables, and supported by strong institutional frameworks aimed at achieving ambitious sustainability goals. The country serves as a model for integrating renewable energy into national grids while addressing future energy demands.1331323334

    Energy Mix

    Iceland’s energy infrastructure is primarily powered by renewable sources, with hydropower and geothermal energy accounting for nearly all of its energy production. While wind power is starting to gain traction, it currently plays a small role in the energy mix. Solar energy potential is limited by the country’s geographical conditions.

    Key Institutions

    • Landsvirkjun: The National Power Company, responsible for the majority of electricity production in Iceland.
    • National Energy Authority (NEA): Regulates the energy sector and oversees licensing for power plants.
    • Ministry of the Environment, Energy and Climate: Develops policies and strategies for energy use and sustainability.

    Infrastructure and Interconnections

    Iceland has a well-developed energy infrastructure, including:

    • Ring Grid: A transmission system that connects the main power plants to consumers across the country. It operates under principles of open access and transparent pricing.
    • District Heating Systems: Extensive networks distribute geothermal heat for residential and commercial heating.

    Export / Import

    Iceland imports all its fossil fuels, primarily oil and coal, as it lacks significant reserves. However, it exports renewable energy in the form of electricity to neighboring countries via proposed interconnectors. The government is exploring options to export hydrogen as a future energy product.

    Policy Goal

    The Icelandic government aims for carbon neutrality by 2040, with plans to:

    • Replace fossil fuels with renewable sources across all sectors.
    • Develop new energy technologies, including wind, solar, and hydrogen production.
    • Enhance energy efficiency measures to meet growing demand while minimizing environmental impact.

    Some of the government regulations surrounding solar panel production

    Electricity Act: The Electricity Act (Act No. 65/2003) governs the production and distribution of electricity in Iceland. While it primarily focuses on hydropower and geothermal sources, it lays the groundwork for integrating other renewable sources, including solar energy. The Act mandates safety and environmental protection measures for all power development licenses, which would apply to solar installations as well.35

    Building codes: While there are no dedicated regulations solely for solar installations, general building codes apply. These codes ensure that any construction, including solar panel setups, adheres to safety and environmental standards.  These codes require consideration of environmental impact and energy efficiency during construction.36

    Energy Policy: The Icelandic government has established ambitious targets for renewable energy under its National Renewable Energy Action Plan (NREAP). This plan outlines strategies for increasing the share of renewable energy sources, including solar.37

    Government initiatives in solar panel production (includes investments and subsidies)

    3839

    Simplified licensing process: There are plans to develop a simple and efficient licensing process for solar energy projects, including setting up a single portal for license applications.

    Regulatory Framework: The government is working on formulating a strategy and framework for the use of solar energy, as well as reviewing legislation to accommodate solar energy adoption.

    Government Leadership: The Icelandic government plans to be at the forefront of solar energy adoption by installing solar panels on public buildings in the coming years.

    Future Building Requirements: Starting in 2030, new buildings in Iceland will be required to be ready for solar panels.

    Subsidies for Remote Areas: The National Energy Authority (NEA) is subsidizing solar panel installation for remote and off-grid communities in Iceland, including small islands and isolated farms that rely on diesel fuel. This initiative aims to reduce energy costs and promote sustainable solutions for these areas.

    Notable solar projects in the country (installed and projected)

    Space-Based Solar Power Project: 1640

    • Partnership: Space Solar, Transition Labs, and Reykjavik Energy.
    • Capacity: The first space solar power plant is projected to have an initial capacity of 30 MW, enough to power approximately 3,000 homes.
    • Launch Timeline: Scheduled for operation by 2030.
    • Technology: This innovative project will harness solar energy collected in space and transmit it to Earth via high-frequency radio waves, where it will be converted into electricity. This approach aims to provide a consistent power supply regardless of weather conditions or time of day.

    Long-Term Expansion Plans:

    By 2036, Space-Based Solar Power Project aims to establish a fleet of six space-based solar power plants capable of delivering gigawatts of clean electricity continuously. Each plant will utilize a modular design to facilitate scalability and adaptability for various locations.

    Some of the notable solar companies (plus brief details on what they do)

    40

    Space Solar

    • Headquarters: Oxfordshire, UK
    • Website: https://www.spacesolar.co.uk/
    • Details: Focuses on developing space-based solar power systems that transmit energy wirelessly to Earth. They have signed an agreement to deliver 30 MW of energy to Reykjavik Energy by 2030.

    Solar Power Solutions Pvt Ltd

    • Headquarters: Reykjavik, Iceland
    • Website: https://www.solarpspl.com/
    • Details: A leading solar company in Iceland, specializing in solar installation, energy solutions, and manufacturing high-quality solar panels. They cater to residential, commercial, and industrial clients with customized solar projects.

    Wpd Ísland ehf.

    • Headquarters:Reykjavik, Iceland
    • Website:wpd.is
    • Details:Primarily focused on developing onshore wind projects but is also expanding into solar energy as part of their renewable portfolio.

    Netberg ehf.

    • Headquarters:Reykjavik, Iceland
    • Website:https://www.blaorka.is/
    • Details:The company specialize in renewable energy solutions, with a focus on harnessing wind, solar, and hydropower resources to create sustainable energy systems.

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