11 Mar 2014

NIB-financed hydropower station in Iceland starts production

16-Búðarháls power station. Photo: Landsvirkjun

On 7 March, a new hydropower station began operations in Búðarháls, southern Iceland. This is the first power station being built in Iceland since the economic recession.

Renewable energy is one of the pillars of Iceland’s economy. Iceland is the only European country that produces all of its electricity from renewable sources. The country is exploring how to export its renewable energy surplus in order to further increase its competitiveness.

The country’s largest power producer, the state-owned company Landsvirkjun, has had plans to build a power station in Búðarháls since 2001. Construction work actually began but was soon put on hold. In 2011, NIB agreed a 16-year maturity loan of EUR 52.5 million with the company, and the project was brought back to life.

Located between two older hydropower stations, Búðarháls utilises the part of the Köldukvísl river that was already being used for electricity production, thus minimising the environmental impact. Iceland’s newest hydropower station is expected to produce 585 GWh of electricity annually. That compares to the annual electricity consumption of the country’s capital, Reykjavik.

Landsvirkjun is the largest power generator in Iceland and one of the largest renewable energy producers in Europe. It currently operates 13 hydropower stations and two geothermal stations.