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Trading in electricity Click to enlarge

Trading in electricity between market participants, and supply from the grid or distribution system.

The liberalised Icelandic electricity market allows consumers – whether individuals, businesses, public organisations or power-intensive industries – to choose their electricity supplier.

While consumers must use the distributor holding the concession for their respective area, the distributor need not be the same company as the supplier.

  • Suppliers are the companies that sell and supply electricity to the end consumer, either through their own generation or by purchasing electricity from others. Such purchases normally take place through bilateral contracts between the supplier and the generator, but could also be effected through a power exchange (PX) – which works on a similar principle as a stock exchange – such as operated in the Nordic countries.
  • Generating companies in Iceland produce most of the electrical power in either hydroelectric or geothermal power plants, and feed it into Landsnet’s transmission system.
  • Landsnet receives the power from the generating companies, transmits it through its grid and delivers it to distributors and
  • power-intensive industries around the country. Landsnet owns and operates all bulk electricity transmission lines as well as all main substations in Iceland. The company has charge of developing the transmission system and administering system operations.
  • Distributors (also ‘distribution system operators’) receive power from Landsnet’s grid and convey it onwards via their own distribution networks to the end consumers in their defined concession area.
  • Power-intensive industries buy large quantities of electricity from suppliers and receive it directly from the grid. Power-intensive industries are those that consume in one location at least 14 MW of power, with annual utilisation duration of 8,000 hours or more.
  • The National Energy Authority of Iceland (Orkustofnun) regulates concessionaire power companies’ compliance with the Electricity Act and other conditions stipulated for their activities. Orkustofnun’s regulatory remit includes revenue caps and tariffs, the accounting separation of companies operating across the electricity market’s key stakeholder areas as well as electricity quality and security of supply. Orkustofnun arbitrates on any disputes arising under its remit.