PORT OF TÓRSHAVN: North Atlantic Trade Hub Receives Modernisation Investment

Strategically positioned between Norway, Iceland, and Scotland, the Faroe Islands is a North Atlantic hub for trade, transport and tourism. The islands are powered by a mix of hydroelectric, other renewables, and traditional fossil fuels. And the gateway to the islands – the heartbeat of the self-governing nation – is the Port of Tórshavn (PoT). Through this perfectly located harbour, trade flows and the Faroe Islands are energised.

But, despite its isolation, the port is well connected to Denmark, Iceland, Norway, and the rest of Europe. Welcoming cruise ships, collecting import trade, handling all exports, and servicing boats and vessels of all kinds, PoT is a critical infrastructure asset.

A major project is underway right now to modernise and upgrade the site, with a new passenger and cargo terminal being constructed to streamline traffic and bring efficiency to logistics on the port.

CEO Hanus Mikkelsen, a maritime industry veteran with experience from around the world, tells Energy Focus that the current project will cap off a busy period and lead to further investment in the future.

“We started the project in June 2024 and it is progressing well,” he says. “We expect to be complete by summer 2026 for the cruise season where we have 50 or 60 vessels every year. The new passenger terminal will receive the national ferry that sails between Denmark, Iceland and the Faroe Islands. We are also shuffling activities across the entire area and one of two of the major operators operating on the terminal will have a new pipeline to handle cargo and logistics.”

Two years ago, the port completed an impressive upgrade – the largest harbour expansion ever in the Faroes – adding new quayside areas to accommodate larger vessels.

“We are still in the process of finalising the area but with this new terminal we should come close to completing the entire port so that logistics can run smoother and more efficient than it is today,” explains Mikkelsen.

“Construction is happening and the groundwork is being done right now. The building elements are arriving soon, and they will start to be mounted on the pier. It will include the cargo hub and the passenger terminal in one building.”

In 2024, the Faroe Islands enjoyed success receiving cruise liners with around 25,000 passengers disembarking at PoT and only three ships cancelling visits. In 2025, amidst construction of the new terminal, 30,000 passengers from 52 ships are already confirmed.

SUSTAINABILITY FOCUS

PoT joined the Environmental Port Index (EPI) in February 2024, collecting valuable insight on the environmental impact of the cruise ship industry. Membership will mandate arriving vessels to record their data in a shared system, encouraging the uptake of knowledge-based improvement from an environmental standpoint.

The Faroe Islands is proud of its natural beauty and environmental biodiversity. In fact, the region sits in some of the world’s cleanest seas with legislation in place to protect the marine environment.

For Mikkelsen, the challenge now is to continue growing business at the port while satisfying environmentally conscious customers and keeping trade moving.

“It is the major hub for cargo import and export for the region,” he details. “Recently, it is more import than export – we have around 800,000 tons of goods coming through our quaysides with 550,000 imported and the rest exported.”

To power such an operation, renewable energies are being explored as long-term replacements for legacy infrastructure, but the new passenger and cargo terminal is the immediate priority. And any future energy plan must be realistic for the Faroe Islands.

Not an EU member and semi-independent from Denmark, raising finances for large installation projects is a challenge.

“For small vessels, we are already providing shore power to a certain extent, but for bigger vessels there is not a business case for a port of our size. It is a challenge, and if we must make the entire investment from our side then the entire business case will never work out. It would undermine our sustainability economically if it doesn’t make sense,” states Mikkelsen.

Currently, electricity from the main power stations on the island comes in the form of imported fossil fuels, hydro, and a contribution from wind, all managed by SEV – the national operator owned by the municipalities that make up the Faroe Islands. Energy infrastructure is still being built to underpin the shift to renewables as well as accommodating the general electrification of the islands.

“We are doing what is possible, but the electrification of the city is not yet ready and we will need to wait before we can fully electrify operations,” says Mikkelsen adding that by 2028 or 2029, PoT might be ready to go further and electrify the total extent of operations for the future.

The reason for planning to electrify is to satisfy demand. Ship builders around the world are already launching electric-powered ferries, cruise vessels, and support ships, with alternative fuels also being trialled. When this worldwide trend becomes mainstream, the Faroe Islands and PoT will have to embrace changes.

“The cars on the piers are becoming electrified. We are looking at electrification of tools and cranes wherever available,” Mikkelsen comments. “There are new builds scheduled to be delivered in the next couple of years to the line that connects Europe and the Faroe Islands and Iceland. They are prepared for alternative fuel, including methanol. They are also looking for shore power, with an entire chain that is electrified with renewable energy.”

But for modern fuels – including ammonia, methanol, hydrogen – there is no production on the Faroe Islands. PoT’s bunkering capability is of a good standard but is limited in capacity.

“Our islands are small,” admits Mikkelsen, “and, if the industry goes down the route of ammonia or methanol as an energy source, we would need to produce here, which would mean plastering wind turbines all over and that isn’t going to happen. We are still exploring opportunities and we don’t yet have a clear path forward as a nation. We have a plan for households and consumption on land, but for ships we need more exploration.”

He adds that finance is now the critical part of energising for the future and without at least a comprehensive plan for renewable energy and modern alternative fuels for a changing shipping industry then some business could be lost.

INNOVATING FOR GROWTH

Innovation here is forcibly rife. Because of the remote location, the Faroe Islands and its ports have been required to invent. That is why you will find a world-class tunnelling industry here, building some of the world’s largest tunnel projects to connect the islands. There is also a world-class fishing operation and a growing sustainable tourism industry that displays consistent improvement and novelty. A seawater heating system has been installed at PoT to heat around 22,000 m² of buildings, and new private companies are looking at alternative energies to satisfy their own growing demand for electricity.

However, growth for the sake of growth is not part of the plan at PoT. There is a need for efficeicny and driving down waste across all aspects, and that is part of the driver behind the new passenger and cargo terminal.

“We split the port area into east and west, and cargo and passenger is on the eastern part with the old terminal remaining for at least another couple of years while construction is completed. The national ferries will still call at the old passenger terminal, and we will use it for passengers who are transported around the island,” says Mikkelsen.

“We have been growing slowly over the last three decades and the amount of cargo has quadrupled in that time. We expect to double the amount of cargo moving through the port in the next 25 years, and we need to have the logistics in place so that we can be efficient with cargo handling and keep our customers happy,” he adds.

Import and export activity is crucial as the economy looks to continue on a growth path, and the port is an engine of growth. Positioning the port as a streamlined, easy, fast point of contact for the rest of Europe is, like anywhere else, vital.

“The entire region has developed dramatically over the last two decades,” says Mikkelsen. “We have been expanding the port as society has developed. Fortunately, we have been able to keep enough capacity, and that has allowed us to support growth. Without this port, the Faroe Islands would be totally different.”

He says that, across the total 400,000 m^2, there is minimal extra space available for expansion and this situation also requires innovation.

Fortunately, PoT remains busy throughout the year. There is no slowdown for this heartbeat of the North Atlantic. The business has been carefully organised so that it is underpinned by the country’s key economic pillar – aquaculture – but it is also a conscious contributor to economic development through tourism, energy, trader, and more.

“This is a port where you can do everything – ship repair, bunkering, fishing gear, landing or discharging, cargo and passenger operations. We are a one-stop-shop and we have the provisions for every vessel. We have a unique situation and that is what helps us,” reiterates Mikkelsen.

Going forward, the CEO is keen to streamline further, removing complexity and inefficiency, creating one of the most capable and well-organised ports in the region that lives up to the city’s mantra of marrying tradition with innovation.  

“We look forward to completing the construction and then organising the port to ensure logistical planning that services clients efficiently,” he says. “That will be our focus for the next few years with the transition to new sources of energy in the pipeline next.

“We have grown the harbour area and developed facilities very well to accommodate the cargo in and out of the port. Now, we must automate, electrify, and systemise the entire maintenance programme of the port, and that will be my focus for the next five years.”

If this progress can be maintained, the port, city, and nation will thrive. And this will help to drive change for the better in the cold, remote, and clean North Atlantic.