Iceland Geothermal Power and Data Centres — 2026-10-08
Recent reports highlight a critical energy deficit in Iceland, with transmission operator Landsnet confirming that power shortages will remain a persistent issue in the coming years without immediate action. Concurrently, the debate over the value added by data centres intensifies, as new data reveals they consumed nearly 4% of Iceland's total electricity in early 2026, prompting scrutiny of contracts and local benefits.
Iceland Geothermal Power and Data Centres — 2026-10-08
Landsnet confirms persistent energy shortage
A new analysis by Iceland’s transmission system operator, Landsnet, has confirmed that energy shortages will remain a "persistent problem" in Iceland for the next few years if immediate measures are not taken. This finding aligns with previous assessments from 2019, indicating that demand from heavy industry and new data centres is outpacing generation capacity.
Data centres consume 4% of national power
According to data provided by Landsvirkjun, data centres accounted for just under 4% of Iceland’s total electricity consumption during the first half of 2026. This figure underscores the growing footprint of the sector, which now uses more energy than all residential homes in Iceland combined. The revelation has fueled public debate on whether the economic returns justify the strain on the grid.
Proposed $1 billion Húsavík data centre faces scrutiny
Plans for a massive 100 MW data centre at Bakki near Húsavík, estimated at $1 billion, are moving forward with construction potentially starting in 2027. The project is one of the largest proposed in the country, but it faces criticism regarding its long-term value to the local community compared to the significant power allocation required.
Norwegian report warns of low-value data centres
A new report from the Norwegian Technology Council, cited in Icelandic media, warns that nine out of ten data centres in Norway are owned by foreign entities that consume excessive power while creating few permanent jobs and contributing little to society. This "low-value" model is being closely watched in Iceland as local stakeholders debate similar risks for their own expanding sector.
Local view
Icelandic media outlets like Bæjarins Besta and Vísir are actively covering the tension between industrial growth and grid stability. Bæjarins Besta highlights Landsnet’s stark warning about the inability to meet demand, emphasizing the need for policy shifts. Meanwhile, Vísir discusses the potential for data centres to provide secondary benefits, such as heating homes in Bolungarvík through waste heat utilization, suggesting a path toward more integrated community value.
Context & numbers
- Electricity Mix: Iceland’s power generation remains dominated by hydropower (73%) and geothermal energy (27%), with wind currently contributing 0%.
- Import Volume: Computer imports for data centres reached ISK 101 billion in the first half of 2026, representing the majority of office machinery imports.
- Crypto Mining Freeze: Expansion for new crypto mining operations has been effectively halted due to energy limits and government policy, forcing new entrants to look elsewhere or pivot to other high-performance computing uses.
On the radar
- Hellisheiði Expansion Completion: Construction on the heating expansion of the Hellisheiði geothermal plant is expected to be completed by the end of 2026, adding 600 L/s of hot water production capacity.
- Bolaalda Project Progress: Developer Reykjavik Geothermal continues to advance the 100 MWe Bolaalda project, which cleared a key parliamentary hurdle in June 2026 by being placed in the "utilisation" category.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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