New geothermal district heating system in Höfn, Iceland

New geothermal district heating system in Höfn, Iceland Visit for the Official Opening of the geothermal heating system (source: Rarik)
Alexander Richter 14 Nov 2021

Local heating utility in Höfn in the East of Iceland has officially inaugurated its new geothermal district heating system in a step securing long-term and secure supply of heating for the local municipality.

With 90% of all homes in Iceland heated by geothermal, the assumption is that all of Iceland essentially profits from having access to affordable and green heating. Yet, some regions in the country have not been able to tap geothermal until recently, and the impact on these communities replacing electric heating with geothermal is profound.

Rarik, the official energy corporation of Iceland, late last month reported on its work on the geothermal district heating network  in Höfn in the East of Iceland.

In recent decades, a heating station and distribution system for electric district heating has been operated in Höfn, and there were ¾ houses in the town connected to the utility that used unsecured electricity but oil as a spare to heat water used in the utility’s distribution system. In recent years, the price of unsecured electricity has risen sharply and the supply of it has been subject to great uncertainty. Therefore, the precondition for the unchanged operation of the district heating utility no longer existed.

Hitaveita Hornafjardar (the local district heating utility) is owned by RARIK, which has invested a lot of work and money in the search for hot water in recent years. An organized search for geothermal energy in East Skaftafellssýsla has been going on since the 1990s and a total of 54 research wells and five 1,100 to 1,750 meter deep production wells have been drilled in Hoffell’s land. From 1992 to 2002, the municipality of Hornafjördur and the National Energy Authority paid for the geothermal exploration, but RARIK participated in the project in 2002. Until 2006, 33 exploratory wells were drilled, but after RARIK acquired the geothermal rights in Hoffell in 2012, 21 additional wells were drilled and five production wells were specified.

30 to 95 sec / liter of 70-78 degree hot water

Tryggvi Thór Haraldsson, CEO of RARIK, celebrated the end of his work in an address he gave at the formal opening of the new district heating system in Höfn today. He said that this had been a large and successful project which, in the opinion of RARIK, had all the potential to become a major step forward for the settlement in Hornafjördur. In his case, it was stated that the results of drilling production wells at Hoffell were better than expected, but now four production wells are available for the district heating company. Three of them have already been activated and one can be activated later. The estimated capacity of the area as a whole is 95 liters / sec at peak load for a short time but about 30-40 liters / sec for a long time. As a rule, one well is sufficient for the district heating, but two at the highest load and then there is one spare, in addition to which one well is inactivated. The temperature of the water when it enters the distribution system at Höfn is 70 degrees at the lowest load and 78 degrees at the highest load. Tryggvi said that the scientists’ assessment is that the geothermal area in Hoffell and the installed system can support a significant expansion of the settlement or an increase in the number of users from what it is now.

Cost 3.5 billion ISK (ca USD 27 million)

In Tryggvi Thór’s case, it was also stated that RARIK’s cost of geothermal power generation, laying 20 km. a main pipe from the power plant area at Hoffell to Hafnar and the development of a distribution system amounts to about ISK 3.5 billion. He said that it was assumed that the cost of users of the new district heating system would be similar to the first years as was the case with the old district heating utility, but when the highest financial costs for the project had been reduced, there were all grounds for lowering the price. to become very cost-effective in the long run.

State involvement is a prerequisite for efficiency

Tryggvi Thór said that a prerequisite for a new district heating system to be cost-effective was that comparable funds would come from the state treasury into the project and to other new district heating systems. There, the Treasury has introduced a one-off payment amounting to 16-year electricity heating subsidies for those connected to district heating and have had a subsidy for direct electric heating. In addition, there was a one-off payment for heat subsidies that the residents of the district heating utility enjoyed. Tryggvi Þór said that it was expected that residents with subsidized electric heating would receive about 35% of their 16-year subsidies up to the cost of alterations to houses, while the utility would receive 65%. He thanked the government for their involvement in this project with initial research grants and then one-off grants.

A 30-year search is finally yielding results

“The introduction of district heating in the Municipality of Hornafjördur is a hugely important step forward. We have been working on geothermal exploration for about 30 years, which is finally yielding results, “said Matthildur Ásmundardóttir, Mayor of Höfn, on this occasion. She said that residents would not experience a large reduction in costs in the first few years, but they hoped that in the long run the cost of central heating would be more efficient. Companies would, however, experience a change immediately that would have a positive effect on their operations. “The collaboration with RARIK employees during the construction period has been very good and I would like to take this opportunity to thank them for the good collaboration,” said Matthildur.

The state’s contribution is just over ISK 1 billion (ca USD 1.7 million)

Benedikt Árnason, Director of the Ministry of Industry and Innovation, represented the Ministry on this occasion. He said that the district heating project in Hornafjördur is in full accordance with the government’s emphasis in recent years and decades on the country’s district heating. The macroeconomic efficiency of district heating compared to heating with electricity or oil would be well-proven. He said that due to the lack of craftsmen, the ministry would give users extra time to be able to use the district heating and they will therefore not have to leave subsidies 9 months after they connect to the district heating. He said that it was estimated that one-off payments from the state instead of subsidies for a new district heating system in Höfn and the surrounding area would amount to just over ISK 1 billion and that the balance would be around ISK 500 million.

Many put their hand to the project

In addition to RARIK’s employees, a total of 40 contractors and suppliers participated in the project. These include:

  • Geothermal exploration and preliminary research: Stapi Geological Survey,
  • Original design: Vilhelm Steindórsson,
  • Geothermal exploration, research and consultancy: ÍSOR
  • System design: Strengthen the engineering office and Verkís
  • Supervision: Mannvit engineering office
  • Geothermal drilling: Raektunarsamband Flói og Skeidi ehf.
  • Laying of foundation pipe: Rósaberg
  • Laying of a local system in Höfn: Gröfuthjónusta Olgeir ehf.
  • Construction of structures: Húsheild ehf.
  • Welding and steel construction: Vélsmidjan Foss ehf.
  • Material in the main pipe and distribution system: Set ehf.

Source: Rarik