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Negotiations for power sales to server farms and silicon refineries

November 9, 2007

This autumn Landsvirkjun has been engaged in preliminary talks with a number of companies which are considering developing new industrial projects in the southern and western parts of Iceland and are interested in buying electric power from power plants proposed in the lower part of the River Thjórsá. It is clear that demand for power far exceeds supply, therefore, it will not be possible to fulfill everyone’s needs.

The prospective customers for electricity who have taken part in the talks are engaged in diverse activities, e.g. alumnium production, silicon production, silcon refining for solar cell applications and the operation of server farms.

The Board of Directors at Landsvirkjun emphasises the importance of obtaining the highest possible price for electricity, risk management and diversity of customers. In that light, Landsvirkjun has decided to enter into negotiations with customers that intend to develop server farms in Iceland. Negotiations are also in the pipelines with companies in the field of refining silicon for solar cells. At this time it is not possible to reveal the companies concerned. The most likely location for these operations will be in the south of the country and the Reykjanes peninsula. Landsvirkjun’s emphasis on server farms and solar silicon is based on the fact that higher prices can be expected in long-term power contracts with them than in contracts with other power-intensive customers. Therefore, Landsvirkjun has, for the time being, decided not to enter into negotiations with companies that intend to build new alumnium smelters in the south and west parts of the country.

In Landsvirkjun’s opinion, electricity from new power stations on the Thjórsá river will best be allocated to operations of the kind mentioned above, and possibly also for increasing the supply to those alumnium smelters already operating in the country. The preparations for the power stations in Thjórsá are in progress and construction could start late next year if everything works out as planned.

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