Profitability Assessment for a Tidal Power Plant at the Mouth of Hvammsfjörður, Iceland

Abstract

With a maximum current speed of 8.7 meters per second, the mouth of Hvammsfjörður is currently at the forefront of sites under consideration that have potential of utilizing a tidal current conversion technology for electricity generation. With research completed and a model created of the area, calculations show the total annual kinetic energy at the mouth of Hvammsfjörður to be about 1,000 GWh. Röst accounts for about 75% of all flow traveling through the mouth of Hvammsfjörður and if harnessed at 30% efficiency it would provide enough energy to power all homes in Iceland, given the homes average electricity usage.However, it is not a profitable project to date due to low electricity prices in Iceland. The cost of generating electricity is only 32.2% lower at the tidal power plant start-up than the electricity price received, but moving to 61.8% in 20 years and 101% in 30 years. Starting the project with 50% higher electricity price, the project provides a positive NPV from total cash flow of 16,274 MISK.At the end of the thesis, a value added to the project is presented for the county of Dalabyggð, that being a tourist attraction design of the plant from day one, keeping in mind the 1,000,000 annual visits to all of the facilities of the company Reykjavík Energy.