Energy policy – the expansion of the energy industry sector in Iceland

Abstract

The profit of sold hydropower energy to heavy industries is insignificant and it is unlikely that it will be profitable unless the hydropower companies reduce their debts. The energy price is known and partially fixed. Expectations that (foreign investment in) Heavy Industry is a way to strengthen the domestic market and diversify exports has ended up having the opposite effect. The Heavy Industry sector does not create a significant number of jobs and the amount of derived jobs is negligible. The macroeconomic effect is limited to the construction period of the power plants. The result is that the hydropower plants yielded only power supply for the three multinational corporations and paid insignificant tax revenues, except for a temporary energy tax. No changes are foreseeable.