This is an update from our release June 10,2010, where we were forced to estimate electricity prices for Iceland 2009 as Statistics Iceland had not updated the information. That information has now been updated. Reykjavik Energy price on electricity for households was estimated to rise from 10.6040 to 11.4041 but rose to 11.2000; an overestimate of 1.92%. The State Electric Power Works price on electricity for households was estimated to rise from 11.0687 to 11.9038 but rose to 13.3000; an underestimate of 12.61%. The update also contains corrections to the Eurostat data. In addition, we replaced EU-27 in the Big 4 average with Italy and included the Big 4 countries in corresponding regional averages. Note that latest Italy prices are from 2007, Austria 2008. The gaps in the data for the Netherlands 2002, 2003 and 2004 and Austria 2000, 2001 and 2002 are filled linearly.
This report attempts to assess the comparative electricity cost for industrial customers in Iceland versus EU. We urge Eurostat and Statistics Iceland to take these series to monthly levels. Information on industrial energy prices from Statistics Iceland on the two leading energy firms, the National Power Company and the State Electric Power Works, ends 2004 while statistics on electricity for households continues through 2009. Eurostat does not include Iceland in its statistics on electricity prices, which demands that these figures be generated by estimating the value based on household average prices. The EUR/ISK conversion utilizes Central Bank of Iceland annual average mid-rate. All figures are EUR/kWh. Note that y-axis commas in the charts is a decimal separator (ex: 0,1500 stands for 1.1500).
Iceland’s price competitive position
From our June 10 report: “Locating an energy intensive operation in Iceland is highly cost-effective. Compared to Germany, France, Italy and the UK, it makes financial sense to establish such an operation here. Logistically speaking, it also makes sense as moving goods from Iceland to the EU or US is faster than from either region to the other. With real estate value (including land) at bargain prices with the possibility of government subsidized labor, taking a serious look at this country is advisable. The technical infrastructure is strong, there is far greater stability here than in many EU regions, and there is no real risk of the ISK suddenly climbing to 2001 – 2007 heights; the country is simply too leveraged.”
Chart 1: Estimated Iceland’s price of electricity to industrial consumers versus EU-27 and individual regions. At 0.0314, Iceland is far below the EU-27 0.0952, Big 4 0.0906, Nordic and Baltic 0.1363 (and includes Iceland which lowers it), Central Europe 0.1165, Eastern Europe 0.2614 and Southern Europe 0.2818.
Chart 2: Estimated Iceland’s price of electricity to industrial consumers versus the Big 4: Germany (0.0975), France (0.0667), Italy (ends 2007 at 0.1027) and the UK (0.1077).
Chart 3: Yearly changes in electricity price. Estimated for Iceland 2009: -16.6%.
Chart 4: 5-year changes in electricity price. Estimated for Iceland 2009: -49.3%.
A plant established five years ago in Iceland and uses electricity to produce goods that go on the EU market has gained a considerable competitive advantage. It is nothing but amazing that Iceland does not concentrate more on manufacturing energy-intensive products for export.