Iceland uses geothermal energy for heat, electricity, cucumbers

Geothermal steam from deep below the ground in Iceland is being used to warm houses, offices, and even greenhouses to grow vegetables, including cucumbers, at Laugaland farm in Varmaland, situated in the north of the island nation.

Most residents of Iceland have known the value of geothermal energy for generations and partake in daily soaks or baths at public pools where the water is heated naturally. Much of the island features relatively minor volcanic and earthquake activity, which creates the geologic conditions to warm water underground that then finds its way to springs and geysers.

At the Laugaland farm, guests at a nearby hotel will often see the farm's greenhouses glowing on frigid nights as mist and fog dances about eerily. The lights stay on beyond sunset in winter to give the cucumbers enough daily growing time, according to hotel staff. 

Iceland has to import nearly all its fruits and vegetables, so the greenhouses in Varmaland are a welcome addition. A nearby resident said the cucumbers can even be exported to nearby Nordic countries, along with other vegetables and flowers.

Some hotel guests are concerned the greenhouse lights will prevent them from seeing the northern lights in the sky, but the greenhouse turns them off after 10 p.m. or so, in time for the northern lights, a hotel employee told reporters visiting the area. 

And, she added, “Residents don’t mind the lights at night because that’s how things are done here in order to raise vegetables.”

Such reactions are quite distinct from some political backlash to windmills used for power in other countries. As one Iceland official said, “people love windmills unless it’s in their backyard.”

Iceland uses geothermal steam to both heat buildings and greenhouses, but also uses geothermal steam to turn turbines and generate electricity, some of which is transmitted via power lines to rural locations where companies like atNorth and Borealis are operating new data centers. Both are smaller than some of the latest data centers in suburban Virginia near Washington, D.C., that are supplied with 1 gigawatt or more of power.  

About 70% of Iceland’s electricity is generated by hydroelectric turbines, but nearly 30% comes from geothermal sources, according to officials at Data Centers by Iceland, a public-private partnership devoted to marketing Iceland as a destination for businesses needing data center access amid a crush of computing growth with artificial intelligence. A small portion of Iceland’s economy depends on fossil fuels, mainly in the mobile and shipping sector.

So far, data centers use only 6% of the country’s energy, but the majority goes to smelting operations to make aluminum, officials said. Iceland only has 400,000 residents, a smaller portion of the energy usage.

While geothermal and hydro are abundant resources in Iceland, “it’s not a limitless resource,” said Bjorn Brynjulfsson, CEO and co-founder of Borealis Data Center and chairman of an association representing the nation’s data center providers.

Officials from Borealis and atNorth led a small group of reporters to see their respective recently-installed data centers in Iceland. The trip, sponsored by Data Centers by Iceland, comes amid a surge of interest in finding cheaper data center resources, which both companies claim they can offer far cheaper than using a hyperscaler.

Since the war broke out in Ukraine, there has been more interest in Iceland to get data center access, Brynjulfsson said, adding that Iceland  has the fortune to be “conflict free.”

As for atNorth, there could be interest from Irish companies to come to Iceland after a protracted process of building data centers there, which have recently led to public protests, said Johann Jonsson, director of site selection for atNorth. Even in Iceland, some citizens don’t want renewable energy resources going to support too many data centers.  

Even so, demand is growing due to AI and other HPC needs.

“Everything [in data centers] is going so high, so dense,” Jonsson said. “We believe we are better at building data centers than the hyperscalers.”

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