Subsidy: National Energy Fund

Updated: 19.12.2018

Author: Jörn Banasiak

The state-owned National Energy Fund grants subsidies for measures that aim to reduce the use of fossil fuels. Among other aims, it supports the exploitation of domestic energy sources instead of fossil fuels (art. 8 Act No. 87/2003).

Eligible technologies

The National Energy Fund offers grants to promote the exploitation of domestic energy sources, among others renewable energy sources, but especially geothermal energy (art. 8, Act No. 87/2003).

Wind energy


Solar energy


Geothermal energy









Grants shall not exceed 50% of the estimated costs of a given project (art. 8 Act No. 185/2016).


  • Entitled party: Icelandic citizens and other persons holding the right to produce energy from domestic resources. According to the Act No. 34/1991 on Investments in Business Enterprises by Non-Residents, only Icelandic institutions are given energy exploitation rights for the non-domestic use of waterfalls and geothermal energy (art. 4 Act No. 34/1991).
  • Obligated Party: The National Energy Fund, which is owned by the state of Iceland (art. 8 Act No. 87/2003).


Process flow

Applicants submit their applications to the National Energy Fund (electronic form). Applications must include a detailed explanation on the nature and purpose of the project as well as a cost estimate and a financing plan (art. 9 Act No. 185/2016).

Immediately after the application deadline, all applications will be submitted to the National Energy Council. After having been reviewed, the applications will be sent to the National Energy Authority, which is supposed to give comments on the documents. Having received the comments, the National Energy Council will discuss and decide upon the applications (art. 9 Act No. 185/2016).

At the end of this process, the Council will express its decisions to the Minister of Industry and Commerce (art. 9 Act No. 185/2016).

The Minister of Industry and Commerce is supposed to make the final decision. Then both the National Energy Fund and the applicants are notified so that the grants can be paid out (art. 9 Act No. 185/2016).

National Energy Fund grants will be paid out in three equal payments (art. 10 Act No. 185/2016).

The first payment will be made at the beginning of project implementation (art. 10 Act No. 185/2016).

The second payment will be made when the grantee deems the work on the project half-finished and sends a statement or progress report stating so to the National Energy Fund (art. 10 Act No. 185/2016).

The third payment shall be made after the grantee has submitted a final report on the project (art. 10 Act No. 185/2016).

Competent authority

The National Energy Fund is owned by the state, which is responsible for the fulfilment the Fund’s obligations.

The Minister of Industry, Energy and Tourism supervises the National Energy Fund.

The National Energy Authority manages the daily activities of the Fund. The National Energy Council acts on behalf of the National Energy Authority and presents proposals to the Minister regarding loans, grants and disbursements made by the National Energy Fund (art. 1 Act No. 185/2016).

Distribution of costs


The National Energy Fund draws revenue from

  • interest income from the Fund’s savings
  • annual state budget appropriations (art. 4 Act No. 185/2016). 


Further information

Basic information on legal sources