- EIB signs €100 million loan to Reykjavík’s main provider of energy
- Financing supports modernisation and expansion of electricity and geothermal heating networks in the capital region
- Project fully contributes to climate action and supports Iceland’s 2040 carbon neutrality target
The European Investment Bank (EIB) has signed a €100 million loan agreement with Orkuveitan, Reykjavík’s main provider of energy and utility services, to finance major investments in sustainable energy and utility infrastructure in the Reykjavík metropolitan area. The financing will enable Orkuveitan’s subsidiary, Veitur Utilities, to expand and modernise electricity distribution networks and geothermal district heating systems in response to rising demand across the rapidly growing capital region.
Iceland’s population growth has accelerated the need for new housing and expanded access to reliable utility services. The investment programme includes both the extension of existing networks and the renewal of ageing infrastructure, ensuring long-term security of supply for households and businesses.
The loan will also support increased geothermal heat production and strengthen the electricity grid in line with Iceland’s broader electrification and energy transition objectives. The project directly contributes to Iceland’s national goal of achieving carbon neutrality by 2040 and supports the EIB Group’s strategic priorities on climate action and environmental sustainability.
“Long-term investment in sustainable energy systems is essential for resilient and affordable infrastructure,” said Vice-President of the European Investment Bank Karl Nehammer. “By financing Orkuveitan’s green infrastructure programme, the EIB is supporting Iceland’s energy transition and helping the capital region prepare for continued growth with clean, reliable and secure energy.”
Sævar Freyr Þráinsson, CEO of Orkuveitan, emphasised the importance of the investment for the region’s future:
“This financing marks an important step towards ensuring secure, sustainable and affordable energy for the capital area in the years ahead. By strengthening the electricity distribution network, we are enhancing supply security, and by expanding geothermal heat production, we are preparing our community for continued growth, energy transition and Iceland’s carbon neutrality target by 2040. This is a vital investment in infrastructure that will benefit households, businesses and future generations.”
The loan is financed under the European Free Trade Association (EFTA) Facility, a dedicated EIB instrument supporting sustainable investment in EFTA member countries. The operation fully qualifies as climate action (100%) and aligns with the EIB Group’s Strategic Roadmap.
Background
EIB
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. Built around eight core priorities, the EIB finances investments that contribute to EU policy objectives by bolstering climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and the bioeconomy, social infrastructure, the capital markets union and a stronger Europe in a more peaceful and prosperous world.
The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89 billion in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security.
All projects financed by the EIB Group are in line with the Paris Climate Agreement, as pledged in the organisation’s Climate Bank Roadmap. Almost 60% of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.
Fostering market integration and mobilising investment, the Group supported a record of over €100 billion in new investment for Europe’s energy security in 2024 and mobilised €110 billion in growth capital for startups, scale-ups and European pioneers. Approximately half of the EIB's financing within the EU is directed towards cohesion regions, where per capita income is lower than the EU average.
High-quality, up-to-date photos of the organisation’s headquarters for media use are available here.