New 100 MW geothermal project clears key hurdle in Iceland
Bolaalda, Iceland (source: Reykjavik Geothermal)
Alexander Richter
25 Jun 2026
Iceland's Parliament has placed the Bolaalda geothermal project in the utilisation category, allowing developer Reykjavik Geothermal to advance development of its planned 100 MWe power plant.
Iceland’s Parliament (Alþingi) has approved the inclusion of the Bolaalda geothermal project in the utilisation category of the country’s National Plan for Land Protection and Energy Development (Rammaáætlun), clearing a key regulatory hurdle for the planned geothermal development in southern Iceland.
The decision allows Reykjavik Geothermal to move ahead with the next stages of the project, including detailed planning, environmental impact assessment, zoning work, and further exploration drilling. The project is planned with a generating capacity of up to 100 MWe of electricity and 133 MWth of thermal energy, making it one of Iceland’s larger geothermal developments currently in the permitting pipeline.
Development enters next phase
According to comments by Reykjavik Geothermal CEO Magnus Asbjörnsson in an interview with local newspaper Morgunbladid, the parliamentary decision follows several years of technical investigations and broad political support.
The company has held the reconnaissance licence for the approximately 65 square km project area since 2018 and has completed geological, geophysical, archaeological, and environmental baseline studies. Further drilling will now be required to confirm the geothermal resource before any final investment decision.
Asbjörnsson said the company hopes to begin exploration drilling as soon as permitting allows, noting that obtaining all required approvals and completing environmental assessments will still take several years.
Supporting regional industrial development
Located near Þorlákshöfn in southwest Iceland, the Bolaalda project is expected to strengthen energy supply for future industrial development in the region.
Besides electricity generation, the project is designed to supply up to 133 MWth of geothermal heat, opening opportunities for direct heat use and supporting Iceland’s ambitions to expand green industries that require reliable renewable energy.
According to Reykjavík Geothermal, total investment in the project is expected to be between USD 400 million and USD 450 million (approximately ISK 60 billion).
International geothermal portfolio continues to expand
The parliamentary approval comes as Reykjavik Geothermal continues to expand internationally. The company recently started geothermal drilling on Tenerife in the Canary Islands, where it is leading development of one of Spain’s first geothermal power projects. The Icelandic company is also pursuing geothermal developments in several other international markets.
Asbjörnsson told Morgunbladid that growing demand for both electricity and geothermal heat is driving increased interest in new geothermal developments, particularly as Iceland seeks additional renewable energy to support industrial growth.
If exploration drilling confirms the expected geothermal resource, the Bolaalda project could become an important addition to Iceland’s geothermal generation fleet while supporting long-term economic development in southern Iceland.
Source: Mbl & project website
