Does Iceland have a competitive electricity price?

Electricity prices for energy intensive industries in Iceland are relatively competitive at a global level. This is mainly due to the abundant and natural energy sources in Iceland, such as hydro power and geothermal energy. Only a few countries or regions in North America or Europe can benefit from similar energy sources.

How much does a battery cost in Iceland?

As of 2025, the average price for lithium-ion battery systems in Iceland hovers around $150–$200 per kWh. That’s 10–15% higher than EU averages, thanks to those pesky import fees. But here’s the kicker: Iceland’s unique energy profile means batteries aren’t just for grid backup.

Why are electricity costs high in Iceland?

In Iceland, the high electricity costs are driven by the costs of hydro power and geothermal energy sources, which have higher upfront investments than conventional fossil fuel power plants like gas or coal. However, they have lower operational costs.

Does Iceland have a CO2 compensation scheme?

No CO2 compensation scheme exists in Iceland for electricity production. This is not surprising given that electricity production in Iceland is not subject to CO2-emission costs and no cross-border electricity trading exists to directly expose the Icelandic market to such costs.

Does cross-border trading affect Iceland's electricity price?

Iceland’s electricity price is not influenced by cross-border trading, i.e. neither the EU Emission Trading System (ETS) nor changes in load or generation problems of neighboring countries affect electricity prices.

How much energy does Iceland produce in total?

Iceland produced a total of approximately 14.5 TWh in 2018. Wind energy was used for 4.36 GWh (0.03 %) of that production in the same year.