The energy that Iceland has discovered in its subsoil is intended to be the path to the ecological transition and position it as the first Western country to reach net zero. However, it could also be the key to energy investing funds, and it will make you money in the long run (if no other is put in front of it, of course). Find out what it is and how it is possible to invest.
The energy of the future is under our feet, but we only extract it when it causes chaos
Due its setting on a mid-Atlantic ridge, which is an area where earth’s plates (tectonic plates) are spreading apart, Iceland is a country over-rich in volcanic and geothermal activity.
These are the teeth clenching movements in geology that make Iceland the best point to tap geothermal heat which, is the heat of the Earth crust. Production of geothermal power stations come from clean, renewable sources, which are based on drawing from the giant reservoir of steam and hot water that is located underground.
Geothermal energy has many positive sides. The power it brings is incredibly stable and resistant to changes in weather unlike wind and solar power. There is also a comparatively low land area footprint given the high-power output and few greenhouse gas emissions whatsoever.
Iceland guarantees over 25% of its energy generation from geothermal sources that indicate that some 85% of the Icelandic primary energy consumption is from renewable geothermal and hydro power resources.
Iceland has a total of 220 volcanoes that lay underneath glaciers and at the coast and it is incredible to know, that only a tiny portion of its huge geothermal potential is used only now.
Geothermal energy enters the top energy investing funds: towards a more sustainable portfolio
The global market for geothermal energy is expected to reach about $6.8 billion by 2026 according to the Allied Market Research Projects which estimate the market to grow at a 5.0% CAGR between 2019 and 2026.
Major drivers for expansion in the geothermal sector are electricity demand’s increases, supportive government policies and environmental regulations, and people’s perceptions about traditional sources of energy.
It is predicted that by 2026, Geothermal power sharing will increase from 14,774MW to 21,400 MW. The Asia-Pacific region evades Europe and North America in terms of installed capacity for the production of geothermal power in the world.
Kenya, Ethiopia, and Indonesia, among others are mindful of their geothermal resource endowments and they heavily invest in geothermal energy development as a result. Likewise, the increase in the consumption of ground gird heat pumps is also among the reasons why the geothermal energy demand is expected to increase.
Two portfolios to watch closely: Icelandic market offers a golden opportunity
Iceland is a home to many leading geothermal industry’s companies throughout the world. Here are examples of major Icelandic geothermal companies that investors may want to consider:
Landsvirkjun is natinal power company of Iceland. More than 70% of its power-producing capacities are made up of renewable hydro and geothermal resources. The company has power plants as well as generation assets owned, like the Nesjavellir geothermal power plant with an installed capacity of around 300 MW.
HS Orka is one of Iceland’s most prominent energy businesses that devotes to geothermal energy production alone. The company has two geothermal power stations at the Reykjanes peninsula, which is close to one of the most popular tourist attractions – Blue Lagoon.
As you can see, geothermal not only has enormous potential for our homes and industry, it could also be a new model for energy investing funds. A portfolio dominated by renewables, but diversified by geography, could be the future. Trading will also be marked by sustainability, and the portfolios that embrace it first will gain the most.