The disruption of global oil supplies following the Strait of Hormuz closure has pushed energy costs higher across every sector, including food. Modern food systems consume up to 30% of global oil supplies, making the fossil fuel integral to the agricultural sector.
With the Iran war straining supplies, Iceland shows how alternative energy sources like abundant geothermal resources can let food businesses operate free of that price volatility. That insulation has real value when international energy markets are in turmoil.
Food manufacturing is one of the more power-hungry sectors in any economy, demanding heat, refrigeration, lighting, and processing capacity at every stage. In Iceland, much of that demand is met by energy pulled directly from the ground, driven by volcanic activity deep below the surface.
The food industry there costs less to run and is far less exposed to disruptions on the other side of the world, unlike other countries that are heavily reliant on imported oil.
Iceland’s geothermal systems split into two distinct types: low-temperature and high-temperature systems. The former provides heat but cannot generate steam or electricity as heated water travels up through boreholes, making it ideal for warming the greenhouses that Iceland’s climate demands.
High-temperature systems work differently: water sitting deep in volcanic rock heats until it vaporizes, and that steam spins generators. Both types serve the food sector directly, with Vaxa Technologies, an algae producer, drawing power from a geothermal plant a few steps away. Indoor crop growing at scale is among agriculture’s most power-hungry methods, and that nearby supply makes operating costs far more manageable.
Kiddi Haflidason, the company’s general manager, said the plant provided every resource needed to build, test, and commercialize their system. Friðheimar, a greenhouse tomato farm, pipes water from geothermal springs 200 meters away to heat its growing facilities, with lighting supplied by hydroelectric and geothermal sources.
Tomatoes are typically grown in much hotter parts of the world, so producing them in Iceland without geothermal heat would not be viable. Sea Growth, which produces cultivated salmon, also taps into the same locally available clean energy to run its operations.
Many countries sit on usable geothermal reserves, including New Zealand, Japan, Kenya, Mexico, and Germany, though most develop them far less than Iceland does.
Kári Valgeirsson, who works as a science communicator at Iceland’s Hellisheiði facility, noted that while sitting near the energy source helps, it is not essential. Wherever the resource exists, the appeal is a dependable source of power rooted in local geology rather than global trade.
With more companies like GeoSolar Technologies Inc. entering the renewable energy market, food production is likely to increasingly tap locally-generated clean energy as imported fuels lose appeal due to the volatility they experience during times of conflict.
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