The Ministry of Finance and Economic Affairs and Landsvirkjun have reached an agreement on the acquisition by the State of Landsvirkjun’s 64.73% share in Landsnet hf. According to a share purchase agreement the State will buy Landsvirkjun’s shares in Landsnet, priced at book value, amounting to 305 million USD.
Landsnet was established by law in 2004 and commenced operation in 2005. Landsnet operates under a concession and plays an important role in the electricity market as the sole transmission system operator in Iceland. The owners of the company at the outset were Landsvirkjun, Rarik and the Westfjord Power Company. In 2007 Reykjavík Energy joined the group of owners and the ownership has remained unchanged since.
It is noted in the government Energy Policy to 2050, published in 2020, that impartial ownership is fundamental to transparency and non-discrimination in the energy market, and that it is for that reason important to complete the separation of ownership of the transmission enterprise so as to bring it under direct public ownership. The State’s purchase is rooted in this standpoint and consistent with the provisions of recent amendments of the Electricity Act and the Act on the establishment of Landsnet.
Hörður Arnarson, Landsvirkjun CEO:
“The conclusion of this agreement is pleasant. Landsvirkjun has long been advocating a change in Landsnet’s ownership and drawing attention to the unfortunate situation of Landsnet, with its regulated natural monopoly on energy transmission and system operation, being owned by electricity producers and distributors. An unchanged ownership would be inconsistent with principles of separation of competitive operations from basic system operation in the energy market. It is gratifying to see this change now become a reality.
Landsvirkjun is owned by the Icelandic State. The company generates about 70% of all electricity used in Iceland from 100% renewable energy sources, hydro, geothermal and wind. The company operates eighteen power stations; fifteen hydropower stations and three geothermal power stations, as well as two wind turbines.