Iceland's Geothermal Bailout

It's spring in Iceland, and three feet of snow covers the ground. The sky is gray and the temperature hovers just below freezing, yet Gudmundur Omar Fridleifsson is wearing only a windbreaker. Icelanders say they can spot the tourists because they wear too many clothes, but Fridleifsson seems particularly impervious. He's out here every few days to check on the Tyr geothermal drilling rig, the largest in Iceland. The rig's engines are barely audible over the cold wind, and the sole sign of activity is the slow dance of a crane as it grabs another 30-foot segment of steel pipe, attaches it to the top of the drill shaft, and slides it into the well.

Beneath the calm landscape, though, Fridleifsson and his crew of geologists, engineers and roughnecks are attempting the Manhattan Project of geothermal energy. The two-mile-deep hole they've drilled into Krafla, an active volcanic crater, is twice as deep as any geothermal well in the world. It's the keystone in an effort to extract "supercritical" water, stuff so hot and under so much pressure that it exists somewhere between liquid and steam. If they can tame this fluid — if it doesn't blow up their drill or dissolve the well's steel lining — and turn it into electricity, it could yield a tenfold increase in the amount of power Iceland can wrest from the land.

Iceland's geological evolution makes it especially well suited to harvesting geothermal energy. The island is basically one big volcano, formed over millions of years as molten rock bubbled up from the seafloor. The porous rock under its treeless plains sponges up hundreds of inches of rain every year and heats it belowground. Using this energy is simply a matter of digging a well, drawing the hot fluid to the surface, and sticking a power plant on top. Then, as power plants go, it's business as usual: Steam spins a turbine that drives a generator, and electricity comes out the other end. More than 50 countries use geothermal power; pretty much anywhere magma and water are within a few miles of the surface is fair game. Iceland ranks 14th in the world for geothermal resources but is the highest per-capita producer of geothermal power. It's committed to getting clean power out of the ground.

And commitment is what the rocky country needs right now. Last fall, Iceland entered a deep economic recession following a financial meltdown. Now, Iceland's economy is down to fishing, metals and its clean, limitless supply of geothermal energy. It's betting heavily on that energy, hoping to someday offload excess electricity to Europe through undersea cables, and Fridleifsson's project is the all-in wager of the game. Many countries dabble in green energy — a solar plant here, a wind farm there — as they try to wean themselves off oil and coal. Iceland, on the other hand, has been making zero-emissions power a reality since the oil shock of the 1970s, when its progressive inhabitants realized that their dependence on imported energy was an economic vulnerability. Fridleifsson's project, once just a scientific experiment, is the most recent expression of that ethos. If the gamble pays off, it could not only catapult Iceland out of debt but revolutionize renewable-energy efforts around the world.

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