Discussions on Energy’s Beneficial Impact on Iceland


Landsvirkjun’s Annual General Meeting (AGM) 2024 was well attended at the conference centre Harpa in Reykjavík. The AGM’s agenda was Power for Society.

About 400 guests participated in the meeting, with an additional 1,300 watching the live stream.

The most essential State-owned company

Watch the recording from the AGM (icelandic)

The Minister of Finance and Economic Affairs, Þórdís Kolbrún Reykfjörð Gylfadóttir, who handles the Government’s share in Landsvirkjun, addressed the meeting and expressed congratulations to the Company, its employees, and the owners - the citizens of Iceland - for excellent operational performance. Sensible decisions and implementations in utilising energy sources returned extraordinary value for the country.

Þórdís Kolbrún Reykfjörð Gylfadóttir
Þórdís Kolbrún Reykfjörð Gylfadóttir

No progression is, in fact, a regression, remarked the Minister. We must continually strive to improve our position as an outstanding and peaceful country with a high economic and cultural standard of living. However, we must not take that for granted.

Furthermore, the Minister emphasised the importance of national security as one of the criteria for every decision made regarding power issues to be prepared for some knocks and jolts on the way. She also underlined that Landsvirkjun is the most essential State-owned company in Iceland. The Minister further emphasised that she still supported the establishment of the National Reserve Fund, which would be intended to finance public expenditure due to exceptional contingencies and would be partly funded with dividends from Landsvirkjun.

Success No Coincidence

Landsvirkjun’s Chairman of the Board, Jónas Þór Guðmundsson, applauded strong operating results in 2023, which reached a solid new record level from the record-breaking financial results in 2022. Landsvirkjun is on equal footing with other energy companies in the Nordic countries. This success is no coincidence. On one hand, it is due to investments in new and profitable power stations. On the other hand, it is due to renegotiations with the Company’s most significant customers, who now pay energy prices comparable to those of the countries we compare ourselves with.

Jónas Þór Guðmundsson
Jónas Þór Guðmundsson

The Chairman put specific emphasis on Landsvirkjun’s investments in the last decade when three new power stations were commissioned: Búðarháls Power Station, Þeistareykir Geothermal Station, and Búrfell II Power Station. These investments supported the recovery of the Icelandic economy after the economic crisis, which hit the country hard. One might say that we are in a similar position to a decade ago, as the Company has not been given the flexibility to meet increased demand for electricity. Therefore, the electricity system is operating at full capacity, and energy generation will probably not meet demand until 2027-28, the soonest, when Búrfellslundur Wind Farm and Hvammsvirkjun Power Station will be connected to the grid, i.e., if all goes to plan.

Landsvirkjun is not the culprit here; moreover, the danger of energy shortage has been forewarned many times if the licensing process is not made more effective. On that subject, the Chairman pointed out that the licensing process for Hvammsvirkjun Power Station began in 1999, and waiting for a green light for a quarter of a century is unacceptable.

One of a Kind

Hörður Arnarson, Landsvirkjun’s CEO, discussed the Icelandic electricity market and how well its development and operations had been carried out.

Hörður Arnarson
Hörður Arnarson

The electricity system uses 100% renewable energy in an isolated grid - one of a kind worldwide. Nevertheless, this system checks all the boxes: stable and low energy prices to the public and secure delivery, excellent capacity utilisation, competitive operations environment for large end users, and required rate of return. These results are what every country in Europe is aiming to achieve. The higher the rate of renewable energy generation in the continent, the sooner their energy systems will become more like that in Iceland.

Hörður emphasised that these extraordinarily successful operations did not mean that challenges were non-existent. Suppose targets for the energy transition and expected economic growth are to be met. In that case, the Government must take responsibility for secure delivery to households and smaller companies and facilitate further energy generation.

Energy Efficiency Always First Option

Jóna Bjarnadóttir, Executive Vice President of Community and Environment, discussed the benefits of improved energy efficiency and how much it could support the energy transition overall.

Jóna Bjarnadóttir
Jóna Bjarnadóttir

Jóna referred to an analysis conducted jointly by Landsvirkjun, the National Energy Authority, and the Ministry of the Environment, Energy, and Climate in 2023. The outcome was that if everybody joined hands, there is an opportunity to improve energy efficiency by 360 GWh in the next five years and further approximately 800 GWh in the next ten years, as this does incur costs. Jóna emphasised that at all operations levels at Landsvirkjun, energy efficiency is always the first option.

Furthermore, the analysis shows that despite opportunities to improve energy efficiency, the rise in demand due to the energy transition and the growing economy must still be met with increased energy generation. Landsnet predicts 6.5 TWh are needed until 2035. Meanwhile, maximising energy efficiency will only return 1.3 TWh.

Financial Health Never Better

Landsvirkjun’s financial results for 2023 mark a historic excellence for the national power company, established in 1965. Rafnar Lárusson, Executive Vice President of Finances and Information Technology, says it is delightful that the Company now has a required rate of return.

Rafnar Lárusson
Rafnar Lárusson

Financial obligations are also at a historic low, and in 2023, Landsvirkjun’s credit rating was upgraded to A-, reflecting the Company’s strong financial standing and stable outlook. The Norwegian Statkraft is the only energy company in the Nordic countries with a higher rating.

As announced earlier, Landsvirkjun’s Board of Directors will propose to the AGM a dividend payment of ISK 20 billion to the Icelandic State for the operating year 2023. The dividend payment for 2022 was approximately ISK 20 billion.

Several Construction Projects on the Horizon

The next decade will be a time of construction projects at Landsvirkjun, all things being equal.

Ásbjörg Kristinsdóttir, Executive Vice President of Construction, gave an overview of new construction projects the Company is planning.

Ásbjörg Kristinsdóttir
Ásbjörg Kristinsdóttir

The largest project is Búrfellslundur Wind Farm, where up to 30 wind turbines will be installed near Mt. Vaðalda. Hvammsvirkjun, a hydropower station, will be the 8th power station in the river area of Þjórsá and Tungnaá. Furthermore, the expansion of the Sigalda Power Station is planned to boost the power at the river area of Þjórsá and a considerable addition is also scheduled at the Þeistareykir Geothermal Station.

Landsvirkjun would like to thank everyone that attended the AGM at Harpa or watched the live streaming at mbl.is or visir.is. The Company aims to provide clear and concise information on its operations. The following is a link to the newly published Annual Report 2023.