Árni B. Möller writes:
The position of the electricity system in Iceland has seldom been as fragile as it is now.
According to Landsnet’s new analysis, Grid Balance 2025, we are facing a trend where energy shortages will no longer be a theoretical problem in forecast models, but a real challenge that could affect all users of the system. Increased pressure on production capacity, peak periods in winter and bottlenecks in the transmission system are among the factors that mean that security of supply is now threatened, especially if urgent construction continues to be delayed.
The effects and consequences of operational disturbances in the electricity system vary from region to region, as residents in the southwest are rarely aware of the problem, while residents in rural areas are more likely to experience power outages and possible property damage.
In 2026, it is estimated that the probability of energy shortages will be 14% if nothing is done. By 2029, that number could reach as high as 70%. Behind these figures lies a complex picture: increased demand due to the energy transition and economic development has not been adequately offset by new energy generation or strengthening of the transmission system. Dry water years further increase the risk, as shrinking inflow into reservoirs causes reduced energy production and increases the likelihood of curtailments, especially in the middle of winter.
However, energy security is not only about the amount of energy, but also the system’s ability to deliver power when it is most needed. In many places, the transmission system is run at its tolerance limits, and when there is a risk of faults or disturbances, it can be difficult to transmit electricity between parts of the country. Bottlenecks such as Section IIIb between South and North Iceland hamper both new energy generation and secure energy supply. In some scenarios, cumulative energy shortages over the period 2025–2029 are calculated in tens or hundreds of gigawatt-hours, with significant impacts on users.
Landsnet’s analysis shows that systematic and coordinated development, both in the transmission system and in new power stations, can significantly reduce these risks. Among the projects that could make a difference are the Blanda Line 3, the Holtavörðuheiði Lines and the expansion of power plants such as Sigalda and Hrauneyjafoss. The projects that are already on the action plan for the next few years will certainly improve the situation, but at the same time it is clear that they are not enough on their own to ensure satisfactory delivery capacity when looking at the overall system.
Flexibility and future direction
In the discussion about solutions, it is often forgotten that energy security is not based solely on new production or transmission lines. User behaviour and the functionality of the electricity market are also important. Analyses show that flexible use can play a key role in balancing load and responding to short-term deviations. By allowing large users to adjust their energy consumption during peak hours, electricity can be prioritised where it is needed most – and thus strengthen the system without immediately making a huge investment.
The big picture, however, is that our system needs radical renewal and thinking about the future. The introduction of variable energy sources such as wind power calls for a new approach to the operation of the system and investment in flexibility, energy storage and technical solutions that contribute to increased security. It is not realistic to postpone the energy transition while waiting for all answers on individual power plant options. It is therefore imperative that a targeted policy on the introduction of wind power be formulated in parallel with the strengthening of the transmission system and the development of the electricity market.
Infrastructure and learning from neighbours
Events outside Iceland show that the stability of electricity systems is not a given, even in developed countries. On April 28, 2025, there were widespread disturbances in the Iberian Peninsula when about 15 gigawatts (about six times the total power capacity of the Icelandic grid) of electricity production disappeared from the Spanish electricity grid in just five seconds.
This led to the collapse of the system, which affected Spain and Portugal, where a number of areas lost electricity for extended periods of time. The incident concerned air terminals, transport and telecommunications systems, among other things, and thoroughly reminded how vulnerable even advanced power systems can be when fluctuations are high and the infrastructure is not equipped to meet them.
Energy security must be viewed as part of national security. Not only because it ensures stable electricity for households and businesses, but also because it supports innovation, regional development and the energy transition that are cornerstones of Iceland’s sustainable future.
Inaction or delay in infrastructure development can have long-term consequences for the nation’s competitiveness and opportunities for job creation. There must be a consensus on speeding up licensing processes, improving consultation with stakeholders and prioritising projects that are of paramount importance for system security and delivery capacity. The Ministry of the Environment, Energy and Climate is currently working in collaboration with Landsnet and the National Energy Authority to define criteria for energy security, possible measures to respond to emergencies and the division of responsibilities between the parties in the electricity system in such a situation.
The Grid Balance 2025 and Grid Plan 2025–2034 reports provide important insights into these challenges and possible solutions. They are available on Landsnet’s website, www.landsnet.is , and are important reading for anyone who wants to take an informed stance on Iceland’s energy security in a changing world.
