Landsvirkjun

Possible power supply reduction to heavy industry

16. January 2014

The outlook for Landsvirkjun’s water budget is now poorer than for many previous years due to a lack of precipitation and low temperatures in the interior of Iceland in spring and summer last year. Inflow into the company’s reservoirs was considerably below average and did not manage to fill them by the autumn. This winter has also been unusually cold and dry, so inflow rates are still below average.

Consequently, Landsvirkjun has informed its major customers that it may have to reduce interruptible power unless the situation improves in the coming weeks. Landsvirkjun’s specialists are monitoring the hydrological balance closely and the company will take the necessary measures. Even only a few days of wet weather could mean a significant improvement.

If it comes to a reduction of supply, Landsvirkjun’s power sales could fall by about 2%, i.e. up to 260 GWh, which could mean up to ISK 700 million lower revenues for the company. Reduced supplies could be a reality from mid-February until the end of April.

A degree of flexibility is built into Landsvirkjun’s power supply contracts, with allowances for a reduction in supply when in times when poor water supply makes this necessary. In contracts with major customers, provision is made for a possible reduction of up to 10% of power purchased. The company therefore has this leeway, and the power-intensive industries operating in Iceland have therefore been informed of the situation and possible reductions ahead. Under the terms of the contracts, they have one month to prepare for the possible change.

Fifteen years have passed since the last time Landsvirkjun had to resort to reductions to take account of a poor water budget situation.

Daily changes in water levels in the reservoirs Blöndulón, Þórisvatn and Hálslón can be seen on Landsvirkjun’s website: http://www.landsvirkjun.com/researchdevelopment/environmentalmonitoring

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