Landsvirkjun's Annual Report
2014

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Highest profit in Company history

Landsvirkjun is built on solid foundations and has been operating for over half a century. Profit before unrealised financial items increased by 20% from the previous year and has never been higher. The demand for Icelandic electricity is increasing, creating new opportunities for advancement and value creation.

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Strong financial position

Landsvirkjun made a profit of 78.4 million USD this year whereas losses amounted to 38.5 million USD in 2013. The Group’s cash flow from operating activities amounted to USD 234 million USD. Good cash flow facilitates ongoing debt reduction further strengthening the Company´s financial position.

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Operating Revenue

USD 438m 3.6%

Ebitda

USD 332m 0.9%

Cash Flow From Operations

USD 234m -9.5%

Free Cash Flow

USD 216m -13.0%

Profit Before Unrealised Items

USD 147m 20.5%

Net Debts

USD 2.190m -9.8%

Shareholder's Equity

39.9% 3.6%

Sold Quantity

GWh 13.082 -0.8%

A Valuable Future

Hordur Arnarson, CEO

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Our role and vision

Landsvirkjun is a state-owned company and our role is to consistently endeavour to maximise the potential yield and value of the natural resources we have been entrusted with, in a sustainable, responsible and efficient manner. Landsvirkjun’s vision is to be a progressive energy company in the field of renewable energy. The Company operates within an international environment and hopes to be amongst the very best in generating and selling energy.

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Successful operations in a dry year

We operate 14 hydropower stations, two geothermal power stations and two wind turbines in five areas of operation, all over Iceland. Energy generation was successful despite difficult water reserve conditions in 2014.

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12.807 GWh

Landsvirkjun generated 12.807 GWh of electricity in 2014. Landsvirkjun supplied a total of 13.085 GWh, a decrease of 22 GWh, from the previous year, which proved to be a record year in electricity sales.


Total electricity generation

2014

GWst12.8070.2%
  • Hydropower: 12.316.6G GWh
  • Geothermal: 483.7 GWh
  • Wind energy:6.7 GWh
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Hydropower stations use the gravity of falling water to turn a turbine, which then creates electricity. Precipitation and glacial meltwater is collected in main reservoirs usually located in highland areas. The reservoirs fill towards the end of the summer period and effectively store energy.

Búðarháls 2014

MW 95 GWh 585
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The Búðarháls Hydropower Station

HYDROPOWER STATION

The Búðarháls Hydropower Station, the newest hydropower station in Iceland, was officially started up on the 7th of March, 2014. Búðarháls is Landsvirkjun’s fourteenth station and utilises the 40 metre head in the Tungnaá River from the tailwater of the Hrauneyjafoss Power Station to the Sultartangi Reservoir. The Station has increased Landsvirkjun‘s generation capacity by 585 GWh/yr.

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4.864 GWh in storage

Landsvirkjun’s maximum water reserve can supply a total of 5.150 GWh of electricity. The year 2014 was exceptionally dry resulting in unusually low reservoir reserves of 4.864 GWh in the beginning of October, 2014.

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The energy generation system in Iceland is isolated and not connected to other energy systems. Its supply capacity is therefore based on dry years. To ensure this, the water supply must be 10% more than energy generation. This means that 10% of the water supply runs past hydropower stations every year and remains unutilised. Electricity generation at hydropower stations involves steering the water intake from reservoirs into the stations to maximise water utilisation.

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New customers and increased demand

In 2014, Landsvirkjun signed contracts with two new clients in the metallurgical grade metal industry: United Silicon hf. and PCC. The companies will need approx. 90 MW of electricity per year and operations are expected to commence within the next two years.

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The demand for Icelandic electricity is expected to grow over the coming years. Landsvirkjun exports over 80% of its energy via the aluminium, ferrosilicon and data center industries. Increased demand and higher electricity prices will inevitably have a positive effect on the Icelandic economy. To meet increasing demand, Landsvirkjun is assessing a number of potential power projects for additional energy generation capacity.

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Construction begins at Þeistareykir

Landsvirkjun is assessing a number of potential power projects all over Iceland and the new Þeistareykir Geothermal Power Station is in the most advanced stage of development. Sustainability has been the focus of all preparation work pertaining to the Þeistareykir project. The first step will be the construction of a 45 MW power station with the possibility of expanding the project to 90 MW in the second phase.

Þeistareykir

MW 200 GWh 1.476
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Þeistareykir

GEOTHERMAL POWER STATION

Wells are opened for discharge at full output during capacity testing to simulate the operation of a 45 MW power station. The objective is to assess if and how the operation of the geothermal station at Þeistareykir would affect the geothermal reservoir. Capacity testing is a component in verifying the sustainability of the geothermal area.

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Estimated energy generation: 200 MW

An environmental impact assessment has been carried out for a 200 MW power station in Þeistareykir. Extensive preparation work was performed at Þeistareykir in 2014. Execution of preparation work showed consideration to the unique nature of the area and great emphasis was placed on working in harmony with the environment and society.