The closure of the Strait of Hormuz during the ongoing war in Iran has disrupted global crude oil supply, pushing prices up and forcing the food industry to look harder at energy costs. Iceland's food companies have found a solution: abundant geothermal energy that sits beneath their operations.
Two types of geothermal energy serve different needs
Iceland's geothermal resources come in two forms. Low-temperature systems extract hot water via boreholes to heat greenhouses, which is critical for food production in the country's harsh climate. High-temperature systems generate steam that turns turbines to produce electricity for broader industrial use, according to Kári Valgeirsson, a science communicator at Iceland's Hellisheiði geothermal power plant.
Food companies rely on local proximity for efficiency
Vaxa Technologies, a vertical farming company producing algae, powers its operations from a geothermal plant "across the street." This proximity is what makes the energy system practical. "This power plant was the perfect starting point," says Kiddi Haflidason, general manager at Vaxa Technologies. "It has all the energy streams that we needed to invent the system, test the system, scale the system, and now we have a scalable system to grow the microalgae." Friðheimar, which grows tomatoes in greenhouses, taps hot water from geothermal springs 200 meters away to heat its facilities and uses hydro and geothermal energy to power its lighting.
Geothermal energy offers resilience against supply shocks
Being close to a geothermal source gives food makers insulation from the global energy market volatility that hit supplies when a major shipping route closed. Unlike oil, geothermal resources are fixed to a location and do not depend on international trade routes or geopolitical events thousands of kilometers away. The cultivated salmon producer Sea Growth also powers production using local green energy.
The model may work outside Iceland
Geothermal resources exist in New Zealand, the US, Mexico, Indonesia, Japan, Türkiye, Italy, Ethiopia, Kenya, Chile, Guatemala, Nicaragua, Costa Rica and Germany. "It's best if a company is relatively close to a geothermal resource but it does not need to be that way," Valgeirsson explains. However, geothermal energy is not as abundant outside Iceland, which limits how widely the model can scale. When available, the resource provides key advantages: reliability, local supply chains, and independence from world supply disruptions.