The impact of th energy exchange, production of hydrogen in Westfjords and forecasting of energy consumption

Abstract

This study examines the impact of energy exchange on Orkubú Vestfjarða, a small power production company in the Westfjords, particularly in the context of Iceland’s goal to achieve a carbon-free economy by 2050. The research focuses on the feasibility of a hydrogen production facility powered by a 2.5MW electrolyser located at one of the company’s power stations in Mjólká. A profitability assessment was conducted for this pilot project under three scenarios: the current state with energy shortages, an adjusted model where additional electricity is purchased to operate the electrolyser at full capacity, and an optimistic scenario where Orkubú Vestfjarða constructs a 20MW power station in Vatnsfjörður. Additionally, forecasting methods were analyzed to optimize the electrolyser’s operating hours by predicting future energy consumption in the Westfjords. The results suggest that the electrolyser project could be profitable in all scenarios, provided the hydrogen selling price meets specific conditions. However, the forecasting models results indicate that the error margin may be too large for accurate predictions of future values. Further research is recommended to explore alternative modeling methods. These findings support the potential for Orkubú Vestfjarða to establish a hydrogen production facility in the Westfjords and contribute to Iceland’s carbon neutrality objectives, but only by improving necessary energy infrastructure in the region by many parties in the energy business.