The European Investment Bank (EIB) - the EU's climate bank - and Orkuveitan have signed a EUR 100 million loan agreement, with disbursements available over the next two years. The financing will support the development of sustainable energy and utility infrastructure operated by Orkuveitan's subsidiary, Veitur Utilities, serving the capital area of Iceland.
The investment forms part of a long-term programme to strengthen critical infrastructure and meet the growing demand for renewable heating, electricity and hot water in the Reykjavík region. Rapid population growth has increased the need for new housing and, consequently, for expanded utility networks and the renewal of existing systems.
The funds will be used to enhance geothermal heat production and reinforce the electricity distribution network, ensuring that the region's energy systems can meet increasing needs driven by electrification, economic growth and Iceland's transition toward carbon neutrality by 2040.
Sævar Freyr Þráinsson, CEO of Orkuveitan:
"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."
Karl Nehammer, Vice-President of the European Investment Bank:
"Long-term investment in sustainable energy systems is essential for resilient and affordable infrastructure. 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."
The EIB loan will help address market challenges that can limit optimal investment levels, such as environmental externalities and the need to ensure secure access to heat and electricity - services with significant public value.
Background
About the European Investment Bank (EIB):
The EIB is the long-term lending institution of the European Union, owned by its Member States. As the EU's climate bank, the EIB finances projects that advance the EU's policy objectives across eight core priorities - including climate action and the environment, digitalisation, innovation, cohesion, and sustainable energy.
In 2024, the EIB Group - which includes the European Investment Fund (EIF) - signed nearly EUR 89 billion in financing for over 900 high-impact projects, mobilising over EUR 100 billion in new investments to strengthen Europe's energy security and competitiveness. All EIB Group projects are aligned with the Paris Climate Agreement, with almost 60% of annual financing supporting climate action and environmental sustainability.
About Orkuveitan:
Orkuveitan is a leading Icelandic energy and utility company, responsible for sustainable generation and distribution of electricity, hot water and geothermal heating to households and businesses in the capital area. Through its subsidiaries - Veitur Utilities, ON Power, and Carbfix - Orkuveitan plays a key role in Iceland's energy transition, renewable energy innovation and carbon capture development.
Press contacts:
EIB Group: Thomas Eriksson, Media Officer Sweden, t.eriksson@ext.eib.org
Orkuveitan: Breki Logason, Chief Communications Officer, breki.logason@orkuveitan.is
