We are committed to providing our customers with a high standard service and competitive products to meet their energy needs.
We sell 85% of our energy to energy-intensive users and generated a total of 14.1 TWh of energy this year.
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A growing data center customer base
Landsvirkjun now supplies electricity to four data centers: Reykjavík DC, Etix Everywhere Iceland, Advania Data Centers and Verne Global.
In 2019, we signed a new 12 MW power contract with Reykjavík DC, a new high-tech data center in Reykjavik, owned by Opin Kerfi, Sýn, Reiknistofa bankanna and Korputorg. Reykjavík DC is backed by an experienced team, with extensive knowledge within a diverse range of fields including IT, telecommunications, real estate and international trade.
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Landsvirkjun and Reykjavík DC sign the power contract. From left: Sævar Þór Ólafsson, Managing Director of Korputorg, Haraldur Hallgrímsson, Director of Sales And Business Development at Landsvirkjun, Kristín Linda Árnadóttir, Deputy CEO of Landsvirkjun, Gísli Valur Guðjónsson, Chairman of the Board of Opin Kerfi and Reykjavík DC, Stefanía Guðrún Halldórsdóttir, Executive Vice President of Marketing and Business Development at Landsvirkjun and Kjartan Briem, Managing Director of Technology and Infrastructure at Sýn.
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Specialises in security and environmental issues
Reykjavík DC specialises in security and environmental issues, offering customised products to both domestic and international customers, focused on quality and safety. The data center is powered by 100% certified renewable energy and operated in accordance with the Tier 3 Standard on operational security. The new data center will be located at Korputorg in Reykjavik and will begin operations in early 2020.
Etix Everywhere Iceland‘s new 25 MW data center began operations in Blönduós this year and Landsvirkjun supplies most of its electricity. Verne Global and Advania Data Centers have been customers for many years. Advania Data Centers operate the largest data center in Iceland.
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Rapid growth in the data center industry
The data center industry is one of the fastest growing industries in the world as the demand for high-performance computing (HPC) is increasing rapidly.
Iceland is in many ways the perfect location for the high-tech data center industry as it offers 100% renewable energy, security of supply, long-term agreements and competitive pricing. The naturally cold environment also cuts operational costs.
Sales to data center customers increased by 50% between 2018 and 2019, or from approx. 350 GWh to 520 GWh.
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The data-processing industry is exceptional in the fact that its carbon footprint is much smaller than other energy-intensive industries.
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International companies and research institutes are amongst the many data center customers in Iceland. Access to HPC technology is fast becoming a prerequisite for research and innovation, where complex calculations and simulations are used to solve a variety of challenges. Data centers in Iceland cover a wide range of these services: Climate studies, financial calculations, car crash tests and drug effect simulations.
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Division of electricity sales
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Customers’ operating environment
Landsvirkjun now has ten energy-intensive customers, the most in the company's history.
Most electricity sales in 2019 were to customers in the aluminium industry. Most of Landsvirkjun's customers had a successful year of operations although challenging market conditions and technical difficulties affected some.
Rio Tinto's operations were successful in the first half of the year. However, an arc flash occurred in one of the three potlines at the plant. The potlines had to be turned off, bringing a third of production to a temporary standstill. Consequently, Rio Tinto’s purchased less electricity as their consumption decreased. The pots were successfully restarted but the plant has yet to reach full capacity.
PCC BakkiSilicon joined our customer base in 2018. The company operates a silicon metal plant in Bakki near Húsavík and has just celebrated its first full year of operations.
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Arbitration Tribunal publishes its findings on the Elkem Power Contract
The original power contract between the companies dates back to 1975 and would have expired in 2019 if Elkem had not decided to extend the contract by 10 years until 2029, in accordance with the provisions of the contract. Elkem subsequently triggered the arbitration clause, outlined in the contract, stating that the power price would be subject to arbitration.
The Arbitration Tribunal published its findings in April 2019, and EFTA (ESA) “concluded that the power price, set by an arbitration tribunal that Elkem Iceland pays to the state-owned power producer Landsvirkjun [did] not constitute state aid.”
Elkem is one of Landsvirkjun‘s four largest customers and consumes 127 MW and 1,035 GWh of electric power. Elkem’s ferrosilicon plant has been in operation since 1979.
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Energy-intensive customers
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Advania Data Centers
Advania Data Centers began operations in 2014. Advania offers a diverse range of data services including HPC Cloud services. The company’s operations are based at Steinhella in Hafnarfjörður and Fitjar in Reykjanesbær. Landsvirkjun provides Advania with a portion of the electricity it requires.
The smelter in Reydarfjordur is Iceland's newest and largest aluminium plant, producing 346,000 tonnes per year. The smelter is one of three in Iceland and became fully operational in 2007. Landsvirkjun supplies 100% of the electricity required.
Kísiljárnsmiðjan á The Elkem ferrosilicon (FeSi) plant at Grundartangi became operational in 1979 and initially produced 60,000 tonnes per year. The capacity of the plant was increased in several stages and today the plant produces 120,000 tonnes per year, a large part of which is speciality FeSi. Landsvirkjun supplies 100% of the electricity required.
Etix Everywhere Iceland began operations in Blönduós in 2019 and also runs a data center in Reykjanesbær. Operations have grown rapidly in recent years. Landsvirkjun is the Blönduós Data Center’s main electricity supplier.
The Norðurál aluminium plant in Grundartangi became operational in 1998 and produced 30,000 tonnes of aluminium at the time but rapidly increased its capacity to 60,000. The plant's capacity is now at 300,000 tonnes per year. Landsvirkjun currently supplies approximately one-third of the electricity used for production.
PCC BakkiSilicon’s new silicon metal plant in Bakki near Húsavík began operations in 2018. The facility produces 33,000 tonnes of silicon and Landsvirkjun supplies 100% of the electricity required.
The Rio Tinto Alcan aluminium plant in Hafnarfjörður became operational in 1969 and initially produced 33,000 tonnes of aluminium per year. The smelter's annual capacity has been increased in stages since then. Landsvirkjun renewed its power contract with the company in 2010 and its capacity has now been increased to about 211,000 tonnes per year. Landsvirkjun supplies 100% of the electricity required.
TDK Foil Iceland (previously Becromal) produces aluminium foils for electrolytic capacitors. The company began operations in Akureyri in 2008 and Landsvirkjun supplies 100% of the electricity required.
Verne Global's data center in Ásbrú in Reykjanesbær began operations in 2010 and was the first of its kind in Iceland. Verne Global's clients include large international companies and institutions in the fields of climate research, financial services, simulated crash testing and genetic and biotechnology research. Landsvirkjun provides the Verne Global data center in Reykjanesbær with all its power.
Reykjavík DC is a new high-tech data center owned by Opin kerfi, Sýn, Reiknistofa bankanna and Korputorg. The data center will start operations in the first half of 2020, at Korputorg in Reykjavík.
Landsvirkjun is continuously working towards widening its customer base.
We primarily focus on developing projects in various industries that reflect our policy on sustainable operations and utilisation. These include companies that utilise excess energy and material streams, released by geothermal energy utilisation as well as companies that create energy-related employment opportunities, such as tourism and health and wellness services.
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The Power of Partnership
One of the key components of Landsvirkjun's marketing strategy is introducing potential customers to the value that can be created by utilising renewable energy and excess energy and material streams.
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Landsvirkjun participates in ongoing formal and informal discussions with a number of companies. These negotiations can take years to conclude, but the process provides us with essential insight into the needs of new business environments. We have also improved the response time and flexibility of our services.
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Increased competition
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The wholesale electricity market is where electricity is traded between electricity sellers. Landsvirkjun sells electricity to its wholesale customers who then sell the electricity to homes and businesses.
Landsvirkjun has eight wholesale customers: Fallorka, HS Orka, Íslensk orkumiðlun, Orka heimilanna, ON Power, Orkusalan, Westfjord Power Company and Rafveita Reyðarfjarðar. Landsvirkjun‘s wholesale customers subsequently sell the electricity to homes and businesses.
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Landsvirkjun sells approximately 14% or 2 TWh of its electricity to the wholesale market.
Since 2017, Landsvirkjun has offered shorter and more flexible power contracts in the wholesale power market compared to previous years. This has improved the efficiency of the electricity system and supported the efficient utilisation of natural resources. Furthermore, these contracts have facilitated the entry of new market players and increased competition in the power market.
As technology continues evolving, Landsvirkjun actively seeks out new solutions to develop our wholesale customer services. We have offered wholesale electricity trading, via a trading website, for some time and these services were expanded in 2019.
Many homes and businesses have chosen to switch between energy suppliers, creating more competition in the retail market. The number of households that switched between suppliers was threefold in 2019 when compared with 2018.
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Green certificates provide opportunities for Icelandic companies
The green certificate market supports eco-friendly electricity generation. Electricity consumers can support sustainable power generation by buying green certificates from companies that generate electricity from renewable energy sources.
Landsvirkjun actively participates in the European Guarantees of Origin market. Green certificates are included with all electricity we sell on the Icelandic wholesale market, providing consumers with a guarantee that their electricity was produced from renewable energy sources.
Consumer environmental awareness is growing and green certificates support businesses in marketing their products. Green certificates give Icelandic companies a competitive business advantage by granting them access to an international market for green products and services. Green certificates enable companies to obtain environmental certification and comply with international green accounting standards.
The sale of green certificates is a source of increased revenue for Icelandic energy companies and gives access to a commodity that is very valuable to the end-user. The sale of green certificates provided Landsvirkjun with over EUR 6.5 million in revenue in 2019. We use this revenue to finance the construction of new renewable energy power stations, improve and refurbish our current power stations and to fund a diverse range of climate action projects.
