The EIB is lending $63.7 million to Landsnet for the construction of a new generation of power lines that will play an important role in the green energy transition.
Landsnet will use the financing to upgrade Iceland’s national power grid to meet increasing demand for energy which will in turn support the green energy transition.
The European Investment Bank (EIB) is lending Landsnet $63.7 million (ISK 9 billion) for its new generation of power lines. Projects covered by the financing include two new transmission lines that improve the interconnection of Iceland’s north-eastern and eastern regions. The improved connections provide greater security and quality of supply — including a greater degree of network redundancy and network loss reduction — and overcome constraints that limit increases in both generation and consumption.
Since Iceland’s electricity utilisation is overwhelmingly based on renewable sources of energy (>85%), this financing will make sure that the green energy transition can reach more homes in Iceland, thus reducing emissions. The project further improves the reliability of the electricity supply for all users, in line with the goals of the European Investment Bank’s energy lending policy as well as Europe’s overall energy transition.
Landsnet CFO Guðlaug Sigurðardóttir stated: “There are exciting times ahead for Iceland's energy sector. Creating value for society and our customers is our top priority. Our main goal is to secure the supply of electricity in Iceland and therefore we have ambitious plans regarding the strengthening of the main grid. We are very pleased that the European Investment Bank has agreed to provide us with a loan for our new lines in the north-east, which have already shown their value. They have increased access to electricity and the security of supply in the region during often difficult winters. We are excited about further collaboration on strengthening the Icelandic grid to support the energy transition where Landsnet will play a key role.”
EIB Vice-President Thomas Östros added: “In the face of climate change, the energy transition is important across the globe. We are very happy to support Landsnet in maintaining the security of supply and improving access to green energy across Iceland, in line with the EIB’s role as the EU climate bank. We have previously supported renewable power generation in the country, and making sure that this green energy is available everywhere is not only good for the local population, but also opens up business possibilities as well.”
Ambassador of the European Union to Iceland Lucie Samcová - Hall Allen added: “The EU is deeply committed to advancing the global green energy transition, and to supporting our partners in achieving even better access to a secure, affordable and sustainable energy supply. This project is thus a perfect example of an initiative the EU wants to invest in. We are very proud of our long-standing partnership with Iceland, a country which has been a frontrunner in the field of sustainable energy for many years. Our belief in Iceland‘s green energy sector is reflected in the nearly €1 billion EIB funding that has been provided to green energy projects in Iceland since 2000.“
The loan will be used to construct a new generation of power lines for the national grid. The system’s renewal is already underway with the Krafla and Hólasandur Lines, which have already demonstrated their importance. They have significantly improved access to electricity in places like Akureyri and the security of supply in the event of severe weather events such as those experienced throughout the winter. They also represent an essential contribution to the energy transition in Iceland. This is the first time Landsnet has received a loan from the European Investment Bank.
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment to contribute towards EU policy goals. The EIB is an important financier of climate action and environmental sustainability projects and issued the world’s first green bond in 2007. In the last five years, the EIB has made over half a billion euros available for projects in European Free Trade Association (EFTA) countries. The EIB’s investment mandate in EFTA countries dates back to 1994, and was last renewed with a €800 million top up in January 2022, making more financing available for climate-relevant projects in Iceland, Norway, Switzerland and Liechtenstein.
Landsnet is Iceland’s transmission system operator and is mainly owned by the state. Its role is to ensure the cost-efficient development and operation of the grid because the security of supply and uninterruptible electricity is one of the pillars of modern society. Reliable electricity is crucial to modern society. Icelandic society depends on Landsnet's transmission system, which must be reliable and trustworthy. At the same time, broad consensus is needed to successfully modernise the transmission system. A green energy future means fulfilling the needs of society whilst protecting the environment we live in.