How Volue Supports Island Systems Ensuring Energy Security: An Example of Landsvirkjun in Iceland

Energy companies managing power assets that are neither connected to the mainland nor part of a liberalised power market can optimise their assets purely against a consumption load forecast. We examine the case of Landsvirkjun, the national power company of Iceland.


Aug 19, 2022

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In the absence of an organised power market, no subsea interconnectors, considerable industrial demand and a changing climate, power producers on islands have to work hard to ensure the secure delivery of electricity through smart production planning.

When island power systems were first built, they often relied on fossil fuel generation (unless the island was lucky to have natural resources that allowed for the construction of hydropower).

Nowadays, islands see a large renewable penetration of wind and solar, which demands also the construction of storage such as batteries or pumped hydro. This makes the energy mix and production planning more complex.

Landsvirkjun in Iceland

Unlike many other islands, Iceland is rich in natural energy resources. It has also spent decades developing an efficient and secure electricity system. ​From a few Watts in 1912 to 19 TWh annual production today, Iceland is the No 1 power producer in the world, per capita.

Electricity and heating in Iceland are already 100% renewable, sourced from hydropower, geothermal energy and wind power.

The Icelandic energy company Landsvirkjun generates more than 70% of Iceland’s electricity.​ And despite the country’s efficient and secure power system, similar to many other island nations, it faces certain challenges in its daily power production planning​.

Power plant Landsvirkjun Iceland

Challenges in Landsvirkjun's production planning​

In Iceland, there is no day-ahead or intraday market. At the same time, Landsvirkjun allows its customers to return or change their orders with very short notice (1 hour ahead). Among Landsvirkjun’s customers are large industries, such as the very energy-intensive aluminium production industry.

This puts Landsvirkjun under constant pressure to accept orders with short notice. Consequently, the Generation Planning division has to create new power generation and balance schedules 24/7 for Landsvirkjun’s power plants.

In addition, the changing climate is presenting constant challenges for the power company putting pressure on the island nation to manage its energy resources efficiently.

Climate change is affecting the variation of inflows and the power producer often has to deal with rapid changes in reservoir levels. The flow of glacial water (more than 10% of Iceland is covered with glaciers) can change very quickly. The smaller reservoirs, in particular, can fill up or empty rapidly.

Inflow forecasting becomes crucial as Landsvirkjun needs to make sure it can handle the water optimally.

A further factor that impacts power production in Iceland is the transmission constraint between the east and west​of the island.

Volue Smart Generation: Energy security through power optimisation

To ensure energy security for Iceland – just like in any other island nation – Landsvirkjun needs to optimally control and regulate its flexible energy resources and storage.

“Landsvirkjun needed smart software that would deliver higher efficiency of energy usage. It also wanted to implement standardised and transparent work processes, as well as have a good overview and reliable storage for its data and results,” says Marco Boninella, Senior Sales Engineer & Team Lead at Volue.

Volue offers a comprehensive software suite for optimising production from power plants as well as planning in an optimal way. With Volue, power producers can optimise their entire portfolio of different assets such as hydro, thermal, renewables and battery storage as well as build best practice processes to get the most value out of their assets.

“We started out using Volue’s Smart Generation software as part of a pilot project, modelling and calibrating some of our power assets,” says Eggert Guðjónsson from Landsvirkjun.

The pilot led to the adoption of the full Volue Smart Generation solution and today Landsvirkjun counts on Volue software to create optimal power generation schedules for its power assets and to send plans to the TSO.

“This is a great case of Volue’s Smart Generation software being used to optimise purely against a consumption load forecast,” says Marco Boninella from Volue. “This is a well-suited solution for energy companies managing power assets on islands that are neither connected to the mainland nor part of a liberalised power market.”

The technology behind the solution

Landsvirkjun uses the Volue Smart Generation software suite to solve their daily challenges in power production planning.

Volue Smart Generation features optimisation models that are able to calculate the optimal production plans and save on the primary resource (fuel or water in case of thermal or hydropower respectively, and electricity in case of batteries).

In addition, Volue Smart Generation features a user interface which allows users to flexibly configure dashboards. In the case of power companies on islands, the user interface can be used to display production plans of the different power assets against the island’s consumption load requirement. Users would then be able to optimise the power assets, still respecting the different power plant restrictions, and easily know at all times how hydropower, thermal power, batteries and renewables come together to fulfil the demand.