Summary sheet
The project comprises extension works on two geothermal power plants outside Reykjavik and refurbishment of the district heating system and electricity distribution system in Reykjavik. The extensions at the power plants are done to sustain production levels by drilling additional wells and to meet environmental requirements by increasing re-injection. The district heating investments comprise some 30 km of new and renewed piping, pumps and tanks. The electricity distribution investments comprise some 30 km of new or renewed underground cables, one new medium-voltage substation, additional transformer capacity and a new SCADA-system. New meters to comply with EU directives are also implemented in both heat and electricity distribution.
The project uses renewable geothermal energy to generate electricity in Iceland, predominantly to meet demand from the energy-intensive industrial facility. The project therefore supports EU and national policy to promote renewable energy. Moreover, the project will contribute to economic growth and diversification in a remote, less-developed region.
The main environmental risk relates to geological hazards (volcanic eruptions and earthquakes), while the main concerns are related to noise during construction and impact on a protected lava field and nature conservation area which the access road will cross. Additionally, the project will emit carbon dioxide and hydrogen sulphide. Mitigation measures in line with industry practice are proposed.
Iceland, as a signatory to the European Economic Area (EEA) Agreement, has adopted EU procurement legislation. The Bank will require the promoter to ensure that any procurement procedures are done in accordance with the Bank's Guide to Procurement and the relevant applicable EU public procurement rules.