Sustainable energy: Iceland's Kárahnjúkar hydro project receives solid marks in comprehensive assessment

Iceland Sustainability

In July last year, we wrote about Iceland’s sizeable renewable resources, and the philosophy of responsible entrepreneurialism, specifically as it applied to an integrated geothermal industrial park and the intensive energy industries that utilise such a abundant and sustainable power profile.

This philosophy is broadly applied to the country’s approach to energy resource development and operation. To that end, in 2017, national power company Landsvirkjun coordinated with the International Hydropower Association (IHA) to undertake a review of the ten-year old 690 MW Kárahnjúkar hydroelectric project, utilising IHA’s comprehensive formal assessment protocol.

Formally adopted in 2011, the Hydropower Sustainability Assessment Protocol is meant to facilitate a broad evaluation of hydroelectric projects across more than 20 relevant categories. The Protocol was developed over a three-year period and included multiple diverse stakeholders, including NGOs (such as Oxfam, the Nature Conservancy, and World Wildlife Fund), multiple governments (including China, Iceland and Norway, banks such as the World Bank, and the IHA itself.

Iceland’s Biggest Hydro Project

Kárahnjúkar - located in eastern Iceland - is Iceland’s largest hydro complex producing approximately one-quarter of the nation’s total electric output. Costing approximately € 1.1 billion at the time of construction, its nearly 60 square kilometers of reservoirs are buttressed by six dams, totaling over 5 kilometers in length, with over 72 kilometers of connecting tunnels.

Landsvirkjun directed the review to evaluate the project ten years into its operation, “with an independent perspective,” to confirm areas of strength and highlight opportunities for improvement, as well as “facilitate an ongoing discussion within Landsvirkjun and with stakeholders about sustainability in the Icelandic context.”

A Project Not Without Controversy

The Kárahnjúkar project was brought online in 2007 to supply energy to Alcoa’s aluminum smelter in Fjardaál. and it was not built without opposition. The IHA evaluation observes that, “At the time of construction, the hydropower project and smelter were more controversial than any other large projects in Iceland’s history.”

The assessment indicates that the project’s “most significant impacts are related to loss of wilderness areas, caused by land inundation by several reservoirs as well as improved access to the highlands, and to changes in the flows of several rivers, all the way to the coast.” In fact, in 2001, the country’s National Planning Agency rejected the undertaking, citing "substantial, irreversible negative environmental impacts." This decision was subsequently reversed four months later by the minister for the environment, prompting a round of lawsuits that ultimately failed.

The project proceeded despite some objections, but efforts have been made to address concerns raised. The assessment notes that during the project’s decade of existence “Landsvirkjun and Alcoa have made significant efforts to mitigate their social and environmental impacts, to create socio-economic benefits, to document changes in the region through a transparent process, and to communicate and cooperate with local communities.” Among other undertakings, The Eastern Iceland Sustainability Initiative was created “to enable rational and fact-based discussions about sustainability, and adaptive management.”

The Assessment Results, and a Few Identified Gaps

In mid-February, the IHA announced results from its assessment, and found that Kárahnjúkar meets Proven Best Practice on 11 out of 17 categories. These include areas such as: Environmental and Social Issues Management; Asset Reliability and Efficiency; Biodiversity and Invasive Species; Water Quality; Reservoir Management; and Downstream Flow Regime.

Kárahnjúkar was also determined to exceed ‘Basic Good Practice’ in six remaining areas, though some shortcomings were identified. The most significant gaps identified related to the initial regulatory framework, which, according to the report “was not set up to equitably share the benefits and compensate the impacts of a project of this kind, which has left a lingering sense of unfairness and frustration among some affected communities.“ The report also observed that “many landowners and resource users have been affected by project-induced changes.”

In addition, transmission constraints result in sub-optimal utilization of water (and power generation, and “Erosion in the Kringilsáranni area, and around Lagarfljót lake, causes ongoing environmental and social problems. “

At the same time, though, the IHA noted that the sparsely populated east Iceland region has seen the creation of about 1,000 jobs (between the employment from the utility and Alcoa), as well as improved roads and infrastructure, and an improved tax base.

In General, a Pretty Solid Report Card

Hydroelectric projects – especially larger ones, often generate some level of controversy. One need only look at Three Gorges in China, Great Whale in Quebec, or current plans to dam the Mekong River to observe the level of opposition such projects can create. While Kárahnjúkar clearly generated controversy at the time of its development, a significant and relatively successful effort has been to manage and mitigate those impacts, as evidenced through the findings of the IHA assessment.

Iceland has been proactive in adopting a philosophy of responsible resource development. It has been observing the IHA standards since 2012, and first applied them to the prospective 82 MW Hvammur plant in 2012 and then to the operation of the 150 MW Blanda hydro plant in 2013.

Affordable Hydro Sustainably Developed is a Draw For Large Energy Users

The IHA noted in its recent report that to date, “Landsvirkjun has undertaken more sustainability assessments than any other power company.” This third party review of the Kárahnjúkar project is a good example of how Iceland strives to responsibly develop its indigenous renewable energy resources. This commitment, combined with the fact that Iceland’s electricity supply is carbon-free and affordable, makes the country an attractive location for energy-intensive industries looking for a home.

Written by Peter Kelly-Detwiler (Guest)

See Peter Kelly-Detwiler (Guest)'s blog

Peter is co-founder of NorthBridge Energy Partners and has more than 25 years experience in the international energy industry. You can follow Peter at: @PKayDee

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