Landsnet forecasts persistent energy shortage in Iceland until 2029 and beyond

Landsnet has forecasted a persistent energy shortage until 2029 and again after 2040, indicating that the transition to renewable energy will be slower than anticipated. The company’s energy forecast, which covers the period from 2024 to 2050, suggests that there are insufficient viable power generation options to meet the increasing demand for electricity, particularly due to the shift toward electric vehicles and greater use of electric fuels.

Demand for electricity is expected to grow significantly, potentially increasing by up to 116 percent by 2050. The forecast predicts ongoing energy shortages leading up to 2029, and possibilities of priority energy cuts as early as 2025 due to inadequate supply.

The energy forecast further indicates that while new energy production facilities are expected to enhance supply in the next decade, they may not be sufficient in the long term to satisfy the rising demand—particularly if domestic production of electric fuels doesn’t keep pace. This has led to revised expectations for full electrification of transport in Iceland by 2040, a timeline that has been adjusted from earlier projections.

The current government policy aims to ban the registration of new fossil fuel-powered cars by 2030 and larger vehicles by 2035. Consequently, all passenger cars are projected to become fully electric by 2043, while large vehicles may not achieve full electrification until 2050.

With historic lows in water reservoirs predicted, the energy supply may fall short of earlier projections, primarily due to poor water year conditions.