Concrete interest in an acquisition of Hellisheidi geothermal power plant in Iceland

Hellisheidi geothermal power plant by Reykjavik Energy, Iceland (source: flickr/ thinkgeoenergy, creative commons)
Alexander Richter 25 Jan 2017

Icelandic media is reporting on an interest to acquire the Hellisheidi geothermal power plant of Reykjavik Energy (ON Power), with no clear indication who is behind it. Rumours have it that this is a group backed by aluminum smelter operators and related businesses.

Reported before the year end and now in more detail, there is an interest by investors to acquire the geothermal power plant of Hellisheidi in Iceland. The Hellisheidi geothermal power plant by Reykjavik Energy (ON Power) has an installed capacity of 303 MW of power generation capacity and also provides heating for the city of Reykjavik.

In an article by Ketill Sigurjonsson, he describes the news and background as best as one can at this point. The following is republished with permission.

“Hellisheidi Geothermal Plant to be Sold?”

A firm called MJDB has made offer to buy the Hellisheiði geothermal plant in SW-Iceland.

The Hellisheidi plant is the largest and most recent geothermal plant in Iceland, starting operation in 2003 (the next geothermal plant in Iceland will be the 45 MW station at Þeistareykir in NE-Iceland). Hellisheiði station has a generation capacity of 303 MW and 130 MW in thermal energy. It is owned and operated by the energy firm Orka náttúrunnar (ON), which is a subsidiary of Orkuveita Reykjavíkur (OR); sometimes referred to as Reykjavík Energy. OR / Reykjavík Energy is owned by the city of Reykjavík and couple of other municipalities in SW-Iceland.

The thermal production from the Hellisheiði geothermal station is mainly used by households and businesses in the capital area of Reykjavík. Most of the electricity generated by the plant is sold to the Norðurál aluminum smelter, owned by Century Aluminum.

Not much public information is available about the interested buyer; MJDB. According to Icelandic media, MJDB is mostly owned by Magnús B. Jóhannesson, who is director of a firm with the name of America Renewables, in Rolling Hills in California. No public information is available about the offering price for the geothermal plant.

Investors and large industrial power consumers may see opportunity in owning the Hellisheiði geothermal plant. Two large industrial companies at Grundartangi in Southwestern Iceland, an aluminum smelter owned by the American firm Century Aluminum and a ferrosilicon plant owned by Elkem / China National Bluestar, have major power purchasing agreements running out in the coming years. Due to the current tight power supply situation in Iceland, it may become very valuable to own Iceland’s largest geothermal plant.

As the Hellisheidi Station has been under stress due to falling pressure in the geothermal area, with substantial investment needed to keep up full production, the interested buyers may also foresee a chance to get the plant for a fairly low price. However, having Icelandic politics in mind, it is very unlikely that the City of Reykjavík has any interest in selling the plant.

Source: Askja Energy