Manpower-intensive investments ahead

5. oct 2020


The financial forecast of Reykjavik Energy expects that in the next six years a total of ISK 108 billion will be spent on maintenance and new investments on behalf of the group. The financial forecast of the OR Group for the period of 2021-2026 was approved by the OR board of directors today. Within the OR Group are, in addition to the parent company, Veitur Utilities, ON Power, Reykjavik Fibre Network and Carbfix.

Pandemic-mitigating investments

The finances of Reykjavik Energy and the subsidiaries are sound, and no significant changes are anticipated regarding income or expenses in the coming years, according to the forecast. This spring, it was reported that Veitur Utilities intended to undertake specific mitigating investments as a result of the Covid-19 pandemic. This proposal is now included in the official financial forecast of the OR Group and amounts to around 4 billion ISK in the year 2021. As stated this spring, it is estimated that with this effort around 200 contractor-jobs in the South and West of Iceland will be created without increasing Veitur’s staff.

A comprehensive update of Veitur’s energy meters is the single largest investment project of the period. Preparations for this have been ongoing for a while, but the transition to smart-meters will take two to three years. About 25 craftsmen will work at any given time on the replacement as well as more people in various supporting functions for the project.

Bjarni Bjarnason, CEO

It is clear that the Covid-19 pandemic will seriously impact Iceland’s economy in the coming months and years. The OR Group contributes to counteracting this impact and significantly increases manpower-intensive projects in the municipalities in its service-area, in the South and West of the country.

We decided to invest more in maintenance and new investments in the utility systems, the total length of which is about 14,000 kilometres. Favourable financing cost, sustained by Reykjavík Energy’s sound finances, eases this effort.

We will also invest in innovation. ON Power will continue to advance the Geothermal Park as a business development area at the Hellisheiði Geothermal Power Plant in Ölfus, Reykjavik Fibre Network is becoming increasingly important as an information highway, and it will be particularly exciting to see how the youngest subsidiary, Carbfix, will do in spreading their unique method for combatting the climate crisis.

Efficiency will be paramount, as it is fundamental that the operation is sound.

Excerpts from the financial forecast

  • OR's net interest-bearing debt will decrease by ISK 26 billion from 2021 through 2026 according to the forecast.
  • OR's income taxes will amount to ISK 11.7 billion during the period.
  • Dividend payments by OR to owners–the City of Reykjavík, the Township of Akranes and The Municipality of Borgarbyggð–will amount to ISK 20.7 billion for the forecast period.
  • A significant part of Veitur’s investments will be in the maintenance of the company's extensive utility systems. These include the renewal of the Akranes and Borgarnes district heating supply, a new sewage pumping station in Reykjavík and various pandemic-mitigating investments in the South and West.
  • ON Power's investments aim to ensure efficient utilization of power plants through reliable steam supply and to fulfil the company’s ambitious environmental targets. The control equipment of the Nesjavellir power plant will be updated, the heating unit at Hellisheiði will be expanded and the Geothermal Park in Ölfus will be further developed.
  • The installation of fibre optic cables of Reykjavik Fibre Network to homes in the urban areas of Reykjanesbær, Árborg and Vogar will be completed during the forecast period.
  • The start-up company Carbfix will continue develop its carbon sequestration technologies at ON Power’s plants while developing its business further, domestically and abroad.