Sales and production

2018 was HS Orka’s best year in sales to date. This can largely be attributed to a marked increase in the sale of electricity to data centres, which has been a steadily growing industry in recent years. The fishmeal factory industry consumed a great deal of energy this year and general electricity consumption continued to increase in most areas of the country. In particular, there was a sizeable increase in consumption in the district of Suðurnes, which can primarily be explained by the extensive development that is taking place in this rapidly growing municipality. The demand for electricity in the general market can be expected to continue, though it is unlikely that the increase will be as much in the coming year as it was in 2018. There continues to be great interest from foreign investors in developing various long-term activities in Iceland. Interest in data centers continues but the downturn in the market value of electricity has meant that interests in the market have diminished. Expertise on the operation of data centers has greatly increased in Iceland and companies specialising in this type of operations work diligently to bring interested parties to Iceland so that they can take advantage of the favourable conditions that Iceland has to offer. Foreign interest in algae farming in Iceland has also increased. Such investments are extremely well suited to activities at the Resource Park, where algae farming utilises more resource streams than electricity for its production.

In 2018, electricity production increased significantly at the Reykjanes Power Plant after having decreased somewhat in 2016 and 2017. The year’s production increase was 33% between years and production capacity has been fully utilised at the Reykjanes Power Plant since mid-2018. Production at Svartsengi has also increased.

In 2018, electricity production increased significantly at the Reykjanes Power Plant

Plans are in place to begin construction on the next phase of the Reykjanes Power Plant by adding a low-pressure unit that will utilise geothermal fluid already utilised by units 1 and 2. The estimated production capacity of the unit is 30 MW and production is expected to begin in early 2021. Changes at Svartsengi are also under consideration, including the possible replacement of older units, to improve utilisation without extracting more energy from the resource.

Construction also began on the Brúar Power Plant in Biskupstunga – HS Orka’s first hydropower plant. This is a 9.9 MW power plant expected to begin production at the start of 2020. Preparations continued for the Hvalá Power Plant in collaboration with HS Orka’s subsidiaries VesturVerk, as well as residents and shareholders in the West Fjords.

HS Orka further increased its purchases from small, private hydropower plants and their combined capacity now amounts to 25 MW, with an annual production total of approximately 160 GWh.

Some changes have been made to Landsvirkjun’s tariffs on the wholesale market, to significantly increase the price of its production. Sales companies on the general market must all purchase peak period power to meet the demand of the volatile general market. Landsvirkjun offers two types of agreements to meet these fluctuations: A variable yearly contract with defined power and energy and short-term energy in variable quantity, which can be purchased for just a few hours.