NIB supports geothermal power production increase in Iceland 

• NIB and Reykjavík Energy have signed a ISK 4,625 million (EUR 32 million) 10-year loan to co-finance investments at ON Power’s Hellisheiði geothermal power plant during 2025– 2027.  
• The project includes expanding thermal production, drilling a new production well, and constructing a new maintenance and storage facility. 
• The total project cost is ISK 6,338 million. 

Reykjavik’s population has grown steadily over the last decade and is expected to continue growing throughout the 2030s. The planned investments will strengthen security of supply and prepare for rising demand. According to Reykjavík Energy, peak demand for hot water in Reykjavík increases annually by 120 litres per second.  

The investments will increase thermal production capacity from 220 MW to 345 MW. Initially, this added capacity is expected to provide an extra 50,000 to 100,000 MWh of renewable heat during peak-demand periods, with growing utilisation alongside continued expansion in the capital area. In addition, the new production well is expected to deliver a net electric output of 5 MWe. 

“This investment is an important step in strengthening the resilience and capacity of our geothermal system to meet growing demand in the capital area. As demand for hot water and electricity continues to rise, it is essential to invest in infrastructure that is both sustainable and future-proof. By expanding production at ON Power’s Hellisheiði power plant, we are ensuring a secure, efficient and reliable energy supply for our communities, while maximising the value of Iceland’s clean geothermal resources,” Sævar Freyr Þráinsson, Reykjavík Energy CEO, says.  

“We are pleased to support Reykjavík Energy, a long-standing client of NIB, as they continue to strengthen security of supply through investments in geothermal infrastructure to meet the growing demand,” André Küüsvek, NIB President and CEO, says.  

Reykjavík Energy is the second-largest energy company in Iceland. The company provides electricity, district heating, cold water, sewage services and fibre-optic cable networks. Reykjavík Energy is owned by Reykjavík municipality (93.5%), Akranes municipality (5.5%), and Borgarbyggð municipality (1.0%).  

NIB is the international financial institution of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden. The Bank finances projects that improve productivity and benefit the environment of the Nordic-Baltic region. The Bank is headquartered in Helsinki with a regional hub in Riga. NIB has the highest possible credit rating, AAA/Aaa, with S&P Global Ratings and Moody’s. 

Contact: 

Tiina Kuusela, Senior Banker, +358 10 618 0241, tiina.kuusela@nib.int 

Tommy Hellström, Associate Communications Officer, +358 10 618 0214, tommy.hellstrom@nib.int