NIB loan to unlock renewable energy and strengthen the Icelandic grid

NIB has signed a 10-year loan deal with Iceland’s transmission system operator Landsnet hf. to increase transmission capacity, stability and reliability of the system by unlocking renewable power.

The USD 50 million (EUR 41 million) loan will co-finance two of Landsnet’s projects which jointly will extend the 220 kV power transmission grid in the north-eastern part of Iceland, and strengthen the transmission system between eastern, northern, and south-western parts of Iceland.

The goal is to increase the capacity, stability, and reliability of the transmission system. The existing 132 kV transmission lines are more than 50 years old and they only have a limited capacity for connecting new users to the transmission system.

The first project relates to the construction of the 121-kilometre-long Kröflulína 3 overhead power transmission line between Krafla and Fljótsdalur, including the modifications of the 220 kV substation at Krafla, as well as the extension of the 220 kV substation and underground cable link at Fljótsdalur. The project started in 2019 and is scheduled to be completed in 2022.

The second project consists of the 62-km-long 220 kV overhead line and 10 km long underground cable between Akureyri and Hólasandur, including new 220 kV substations in Rangárvellir and Hólasandur. The project started in 2020 and will be completed in 2022.

“These projects increase the efficiency and stability of the Icelandic grid and will bring benefits to the economy through improvements in transmission capacity and security of supply. The investments will also contribute to removing some bottlenecks restraining the utilisation of renewable energy generation capacities connected to the grid,” says André Küüsvek, President and CEO of NIB.

In 2017, NIB signed a 10-year USD 50 million loan with Landsnet hf. to co-finance overhead transmission lines connecting the Theistareykir geothermal power plant to the local and main grid, and to the Bakki industrial area near Húsavík, as well as to strengthen the transmission network in the Skagafjördur area and on the Snæfellsnes peninsula.

Landsnet hf. is Iceland’s transmission system operator, which owns and operates 3,300 km of transmission lines, 240 km of transmission cables, as well as 75 substations operating in the 66–220 kV range. Landsnet is ultimately owned by the Icelandic State through Landsvirkjun (65%), Rarik (23%), Westfjord Power Company (6%) and the City of Reykjavik through Orkuveita Reykjavikur (7%). The Landsnet-operated network connects Iceland’s five generating companies to five regional distribution networks and directly to large industrial energy consumers.

NIB is an international financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor’s and Moody’s.

For further information, please contact
Mr Kari Jaukkuri, Senior Banker, at +358 10 618 0237, kari.jaukkuri@nib.int
Ms Niina Rantti, Communications Officer, at +358 10 618 0265, niina.rantti@nib.int