Iceland. Orkuveita Reykjavíkur
| Date of agreement: | 13 Dec 2023 |
|---|---|
| Country: | Iceland |
| Customer: | Orkuveita Reykjavíkur |
| Amount in USD: | USD 100 million |
| Amount in EUR: | EUR 91.05 million |
| Maturity: | 10 years |
| NACE sector / loan type: | Electricity, gas, steam and hot water supply |
This loan contributes to climate change mitigation: 100%
Financing from NIB Environmental Bond proceeds
NEB-eligible share: 100%
NEB category: Renewable energy generation
Amount disbursed: EUR 45.5 million
This project has been financed with the proceeds of NEBs issued under the previous framework
Note: For loans in other currencies than EUR, the equivalent in EUR is based on the exchange rate effective for the disbursement. Read more about the NIB Environmental Bonds
Project
The loan has been provided for financing an investment programme in hydropower and geothermal power production and district heating. The investment period runs from 2023 until the end of 2027.
The hydropower and geothermal projects include rebuilding the Andakill hydropower dam, drilling new production wells, new steam chimneys, refurbishment of cooling towers at Hellisheiði and Nesjavellir.
The investments in district heating entail inter alia new pipelines to new residential areas and capacity increases in existing pipelines, research drilling in new areas for future district heating commissioning as well as increasing storage capacity.
Orkuveita Reykjavíkur provides electricity, district heating, cold water, sewage and fibre-optic cable network to customers in Southwest Iceland. In the key segments of power and heating it serves over half of Iceland’s population. The group owns and operates three power plants, the Nesjavellir and Hellisheiði Geothermal Plants and the Andakílsárvirkjun hydroelectric station, with a combined capacity of 431 MW of electricity. Orkuveita Reykjavíkur is owned by Reykjavík municipality (93.54%), Akranes municipality (5.53%), and Borgarbyggð municipality (0.93%).
Fulfilment of NIB's mandate
Productivity:
The majority of the investments involve refurbishing of the two largest geothermal stations in Iceland. These maintenance investments are a continuous activity because power production of geothermal power plants depends on steam availability from multiple geothermal wells. Maintenance of the required production levels therefore requires among other things drilling of new make-up wells. The investments mostly maintain the utility’s power and heat production capacities. However, the investments at the Nesjavellir energy station will add peak load capacity.
Environment:
The drilling of new make-up wells is a continuous activity needed to maintain the capacity of a geothermal power plants. In this 2023-2027 investment programme, the number of new wells is expected to be 11. If the geothermal wells are utilised too much and at a non-sustainable draw down of their capacity the power plant will lose capacity to generate electricity in the long run.
In addition to drilling new wells, an established system of re-injecting geothermal fluids into to the fields is also necessary to prevent depletion of the geothermal fields capacity to supply steam and hot water to the power plants. The forthcoming investments include both new make-up wells and additional re-injection wells for geothermal fluids.
The investments also include cooling towers at the plant, refurbishment of the plant as well as the refurbishment of existing hydro power.
The Hellisheiði and Nesjavellir power plants have very low escape of CO2 from the wells naturally, around 20 gCO2/kWh. With low natural emissions combined and re-injection of carbon dioxide into the ground, the overall CO2 footprint from the generation will be below 10 gCO2/kWh.
Impact indicators in relation to the project:
- Capex EUR million: 256
Sustainability summary
NIB has evaluated the investments to cause minimal environmental and social risks.
