Key figures

Increase in retail income

Operating profits before depreciation and financial items (EBITDA) increased by 1% between years and amount to ISK 2,774m, as compared to ISK 2,738m in 2014. Operating income decreased by ISK 130m between years, while operating costs also decreased by ISK 252m. Both income and expenses decreased by ISK 723m due to the transfer of employees exclusively involved in providing services to HS Veitur to that company. If account is taken of this transfer, the income increase is ISK 593m between years, particularly due to increased sales in the retail market.

EBITDA increased by ISK 36m

EBITDA 2015

ISK 2.77 bn.

EBITDA increased by ISK 36m between years and is approximately ISK 2,774m in 2015, up from ISK 2,738m in 2014. 

EBITDA 2010 - 2015

Operating income and operating expenses

The company’s operating income amounted to ISK 7,350m in 2015, as compared to ISK 7,479m in 2014. Retail income increased considerably, while costs due to energy purchases increased significantly at the same time. Operating expenses decreased by 4.5%, or approximately ISK 252m between years. Income and expenses decreased by ISK 723m due to changed agreements with HS Veitur.

Decrease in long-term liabilities

Instalments amounting to ISK 2,308m were paid on long-term liabilities during the year. Exchange rate profits were ISK 178m, and price adjustment increases amounted to ISK 36m, which means that the long-term liabilities of the company have decreased by ISK 2,450m since 2014. The equity ratio on 31 December 2015, remains, therefore, very strong, or 58.6%, as compared to 59.7% at the end of 2014.

 

Operating income 2011 - 2015

Equity 2011 - 2015

Equity ratio 2011 - 2015

Estimated profit is ISK 1.7 billion in 2015.

HS Orka 2015 Annual Report

HS Orka performed well

HS Orka performed well in 2015. The total electricity production was 1,294 GWh, which was approximately 4.5% below expectations and approximately 3% less than production in 2014. The company’s electricity production has been stable in recent years, evidence of the quality of the power plants and the abilities of the employees who run them, as the reliability of the electricity production is high. 

Recent years have seen HS Orka increasing sales in the retail market with some success. HS Orka is thankful for such positive business and responses from its customers. HS Orka has yet again been awarded the top rank in the Icelandic Satisfaction Poll in the category for companies in the energy sales sector, for the 13th time in 14 years. The company is extremely proud of this achievement which is, moreover, excellent motivation to continue the good work.

The company’s operating revenue in 2015 was ISK 7.48bn, compared to ISK 7.03bn in 2014. The decrease is approximately 1.8% between years and is first and foremost attributable to decreased income from energy sales to aluminium smelting, as aluminium prices were unusually low during the year. Revenue from electricity sales formed 80,01% of the company’s income in 2015.  

EBITDA 2015 

ISK 2.77 bn.

The year’s EBITDA is ISK 2.77bn, as compared to ISK 2.74bn in 2014. The increase between years is 1.3%. The main reason for this difference is the increase in income from the electricity retail market..

New agreement between HS Orka og HS Veitur

Extensive changes were made to the operation of HS Orka at the end of 2014 and beginning of 2015. More than 80 employees who had been responsible for projects for HS Veitur in accordance with a service agreement were transferred over to HS Veitur. The service agreement between the companies, therefore, underwent significant changes, a fact that must be borne in mind in comparisons between years.

As regards other transactions with HS Veitur, the production and wholesale of hot water into the distribution systems of HS Veitur are the most significant. There has been some increase in the use of hot water in recent years, and 2015 saw the completion of a significant increase of hot water production at Svartsengi to meet future needs.

HS Orka’s contract with Norðurál in Helguvík for electricity sales to an aluminium plant is, as before, the company’s largest project as regards increased energy production and sales. Negotiations for the contract have been on-going for a long time, and the parties have failed to reach an agreement acceptable to both. HS Orka referred the matter to an arbitration tribunal around mid-2014. The conclusion of the dispute is expected in 2016.   

 

Increased energy at Reykjanes

Nevertheless, HS Orka has continued to work on increased energy production in geothermal projects at Reykjanes, Eldvörp and Krýsuvík. Preparations for these projects, which are at various stages, are extremely time consuming. The main tasks have been in the field of resource agreements, licence issuance, basic research and preliminary design. During the past year, a borehole was drilled at Reykjanes peninsula, hole RN-34 for re-injection. Borehole SVA-25 was drilled at Svartsengi, and the drilling of SVA-26 was initiated. Jarðboranir hf. is responsible for the drilling in accordance with an agreement reached following a call for tender in 2014.

HS Orka invested in VesturVerk

HS Orka has spent a great deal of effort on the development of several hydropower projects. New share capital was invested in VesturVerk hf. in Ísafjörður for investigations into the power plant options at the River Hvalá in Ófeigsfjörður (55 MW) and Skúfvatna Power Plant in Ísafjarðardjúp (10 MW). HS Orka now has a majority shareholding in VesturVerk. VesturVerk, moreover, has been engaged in investigations into other power plant options in the Westfjords.

In addition, studies have been carried out for the Brúarvirkjun plant (10 MW) in the River Tungufljót in the Bláskógabyggð region. Other hydropower plant options are also being examined.

The year saw the finalisation of agreements with partners and sponsors for a deep-drilling project that HS Orka will be embarking on this year. Well 15 at Reykjanes will be extended to up to 5,000 m to investigate the lower part of the geothermal system. The project is extremely large and highly interesting. It is very pleasing how well negotiations with all the parties involved in the project have progressed.

Resource Park and other operation

The Resource Park has attracted well-deserved attention. Gamma presented a report this year which was prepared for HS Orka and the Blue Lagoon on the economic and social effects of the operation of the Park. It is safe to say that the conclusions came as a surprise, as few or perhaps no-one had realised how diverse, positive and extensive the effects are. Work is being carried out on the further development of the Resource Park. Mention may be made of increased fish farming, gas refining and the processing of carbon dioxide and the refining and processing of silica in this respect. Development of these projects will begin in 2016. 

HS Orka increased energy sales to data centres in 2015, and this aspect is a growing part of the company’s operation. In 2015, moreover, an agreement was reached for the sale of energy to the planned silicon plant of Thorsil in Helguvík.

Investments

Investments 2015

ISK 2,56 bn.

Investments in 2015 amounted to a total of ISK 2.56 bn. The largest investment involved increased production capacity of hot water at Svartsengi, drilling at Svartsengi and at Reykjanes, construction for a submarine outlet pipe at Svartsengi, work on re-injection pipelines at Reykjanes and investigations into hydropower projects.

Equity ratio 59%

The company’s balance sheet has strengthened considerably in recent years, and its debts have been rapidly decreasing. It is a distinct pleasure to see that the company’s equity ratio at year-end 2015 is 59%. This confirms the company’s ability to embark on further investments in the near future.

Address of the Chairman of the Board

Proud of another year of operational excellence

We were proud in 2015 to achieve another year of operational excellence, marking stable production and increased capacity of hot water production.  The year resulted in increased revenues, taking into consideration the reduction of revenue and costs relating to services earlier provided to HS Veitur. This performance demonstrated again the consistency and dependability of our operations, even in the face of the multiple challenges we faced, such as low aluminum prices and significant competition in the Icelandic electricity market. 

2015 was also a financial success for the company as we strengthened our balance sheet through substantial debt payments from the company’s cash flow and revaluation of the Svartsengi power plant. At our current pace of debt repayment, we may see significantly increased cash flow to our shareholders beginning in 2017.

ISK 320 millions to shareholders

The company continued a geothermal field maintenance program at Reykjanes in 2014, which included drilling 2 new re-injection wells and building a re-injection pipeline, to enhance the stability of the field.  The reinjection system will be in operation in the first quarter of 2016.

Although HS Orka is currently retaining most of its operating cash flow for debt service and potential expansions, a flow-through dividend of ISK 320 million was distributed to shareholders in 2015 representing cash received from the Blue Lagoon resort, which is 30% owned by HS Orka. The Blue Lagoon continued to outperform expectations in 2015 due to increased visitor attendance and operational excellence. The Blue Lagoon also started construction of a new spa facility and a luxury hotel, to be in operation in 2017.

Dispute with Norðurál

A dispute remains with Norðurál Helguvík regarding the conditional power purchase agreement between the parties. Unfortunately the parties have not been able to reach agreement on changes to key terms which would result in the fulfillment of the conditions of the power purchase agreement. HS Orka therefore decided to refer the dispute to arbitration in 2014. Results of the arbitration process are expected in 2016.

Our management team delivered another strong performance during the year. It is interesting to follow and support the development opportunities. Important progress has been made on some hydro power projects, where the first such with HS Orka will hopefully enter construction stage in 2016. 

The Iceland Deep Drilling Project

The Iceland Deep Drilling Project (IDDP) is being led by HS Orka and drilling of a new IDDP well is planned to commence in the summer of 2016, by deepening the existing well 15 at Reykjanes.  This is a very exciting project that can impact future development of the geothermal industry.

Study on the Resource Park

HS Orka and the Blue Lagoon commenced a study on the Resource Park, prepared by GAMMA.  The results were presented in May 2015.  It is fair to say that the Resource Park has gained serious attention and the multiple use of the geothermal resources of HS Orka is world unique.    It is our goal to continue this concept to bring benefits to many parties by using our resources in the best possible way, to optimize the outcome for society and the environment. We are very proud to be using nature’s geothermal asset, our outstanding employees’ expertise and our capital resources to provide clean energy to all of our customers.

Thanks to employees

I wish to thank all of HS Orka’s employees, managers and directors for their strong and unselfish efforts made on behalf of the company, often under challenging circumstances. I also wish to thank HS Orka’s shareholders, Alterra Power Corp. and Jarðvarmi, who continued to work well together, with good cooperation and goodwill in addressing the affairs of the company during 2015. It is my hope that 2016 will be another year of steady and positive results for the company.  

Finance Department

The tasks of the Finance Department are diverse and include financial issues, risk management, insurance, budgeting, accounting and the company’s financing. The department sells HS Veitur bookkeeping services, cashier services and the services of financial experts. In addition, the department is responsible for the company’s IT issues, collection matters and procurements, although these aspects have to some extent been purchased from HS Veitur. 

Changes to procurement arrangement

Considerable changes were made to procurement arrangements during the year when Guðmundur Björnsson retired from the position of Purchasing Manager at HS Veitur. At the time of this change, the decision was made to discontinue purchasing the services of the Purchasing Manager from HS Veitur and instead distribute the tasks that he had undertaken among the employees of the Finance Department, the Inventory Manager at Svartsengi and the new position of the attorney who took over the management of larger tendered projects and contract negotiations. This change was a great success, and there is general satisfaction with the new arrangements. The company will continue its collaboration with HS Veitur as regards certain aspects of procurement. Such services will be purchased from HS Veitur as needed.

IT formulation

Considerable efforts were spent during the year on IT policy formulation in co-operation with Advania. One could say that the task is mainly twofold, i.e. the control equipment of the energy plants and the development of the office network of HS Orka. A detailed analysis on both these issues was carried out and used as the basis for the extensive changes that were initiated during the year. 

In addition, the decision was made to change file systems, as there had been some dissatisfaction with the file system in place. The company settled on an Icelandic system from the company Azazo named CoreData. A competition was held among HS Orka staff as to what the system’s in-house name should be, and the name settled on was Kvikan.

Financial accounting

There has also been some work on updating the company’s financial accounting and payroll system, something that had not been done since 2008 and had become a pressing issue. Due to the length of time that had elapsed since the last update, the scope of the work is significant and will continue for some time into 2016. The update was initiated around the turn of the year 2015–2016 and has mostly gone according to plan. A new tool that manages data warehousing and a new analytic tool for financial information has been adopted in conjunction with these changes.

 

New IT Department Manager

Although the above projects have gone smoothly, there are several aspects that remain unfinished, and it has become ever clearer that it is not acceptable for a company such as HS Orka to be dependent on another company for its IT issues. As a result, the decision was made at the end of the year to recruit an employee to the new position of IT Department Manager with the aim of reducing service purchases from HS Veitur. Sigurður Markús Grétarson, who held the position of Department Manager at Vodafone, was recruited to the position and will begin working in March 2016.

HS Orka has been using the monitoring and risk management system that was adopted in light of the Sarbanes-Oxly Act (SOX) since 2011 for internal controls. In order to ensure the quality of this work, an agreement was reached with the auditing firm ENOR in 2014 for the testing and supervision of these procedures. ENOR submits an annual report with its conclusions to the company’s Audit Committee. The results for 2015 were good, and no major deviations came to light.

Deep-Drilling at Reykjanes

HS Orka has been granted a share in a research grant for participation in a deep-drilling project involving the drilling of a deep well at HS Orka’s energy development area at Reykjanes. This is part of the Icelandic Deep-Drilling Project (IDDP). The DEEPEGS project is a four-year project managed by HS Orka, in co-operation with partners from Iceland, France, Germany and Norway. The management of this project calls for considerable administration and financial services. To be able to undertake this work, an advertisement was placed for a project manager to manage the financial aspects. Jóhann Líndal Jóhannsson, a certified auditor who has been working for Deloitte, was recruited for the position and will start working in March 2016. The project management position is paid for by the project.

 

Detailed formulation and financial planning

A detailed policy formulation and financial planning procedure is carried out annually and ends with the Board of Directors approving, at the end of each year, the financial plans for the following year. In-house settlements are carried out on a monthly basis to monitor the situation and to reveal any deviations from the plans. A comparison with earlier years is also carried out and any deviations clarified. The operation of the company has been stable, and earlier plans have been reliable, so any deviations have been quickly revealed.

Although much was achieved in 2015 in the field of finances, there are numerous tasks that await resolution. The principal tasks involve the adoption of performance indicators and management desktops, work on a comprehensive risk assessment and the adoption of standardised procedures for risk management together with continued improvements to IT issues. There are numerous options for improvements for HS Orka, and the employees of the Finance Department look forward to tackling these demanding projects.

Board and organisation

The Resource Park

The Resource Park value

The year 2015 was an eventful year in the history of the Resource Park. A report was published during the year revealing the value creation, GDP and job creation that is the contribution of the nine companies that form the Park. The report, moreover, touches on the future opportunities that the operation of the Resource Park provides. 

The report was prepared by GAMMA Consulting and Dr Friðrik Már Baldursson, Professor of Economics at Reykjavík University. The conclusions of the report were revealed at a conference in Harpa in May and were followed-up with numerous smaller events for companies, municipalities and NGOs throughout Iceland. In addition, the Resource Park´s website was launched, containing information on the Park’s operations and the results of the GAMMA report in both English and Icelandic.

 

„Society without waste“

The motto of the Resource Park is to foster a “society without waste” and to ensure that all resource streams that flow to and from the companies in the Park are utilised to the fullest extent possible, in as responsible a manner as possible, for the benefit and further progress of the community. The Resource Park is the only innovation cluster known to have been developed based on geothermal energy. The collaboration that has been developed between the employees of HS Orka and the companies within the Park is unique and underlines the special nature of Icelandic geothermal development. Nine companies operating in dissimilar sectors form the Resource Park, companies that directly or indirectly utilise two or more resource streams from the geothermal development of HS Orka at Reykjanes. .

600 employs in the Resource Park

The Resource Park currently employs almost 600 people, and one may surmise that another 600 derived jobs have been created due to the activities there. One can furthermore argue that unemployment in the Suðurnes region would have been, on average, one percent higher during the years between 2008 and 2014 if the Resource Park had not been established.

Resource streams not fully exploited

Resource streams from the operation of HS Orka in the Suðurnes region are not yet fully exploited, and an increase in the number of companies within the Park is expected in the next few years. HS Orka has signed a partnership agreement with the Danish company Haldor Topsøe for the refinement of hydrogen sulphide from part of the gas flow from the energy plant at Svartsengi. Operations begin in the summer of 2016, and the plan is to be able to offer a clean carbon dioxide stream (CO₂) for industrial use and/or food production in early 2017. Experiments are underway at Reykjanes to precipitate silica (SiO₂) from the separator fluid. The physical characteristics of the silica (SiO₂) have been under investigation in conjunction with the precipitation experiments for the purpose of finding a suitable avenue of use.

A greater number of diverse and specialised companies that base their operation on research and development strengthen the Resource Park and the ideology on which its operation is based. With increased technology, processing utilisation and an increase in the number of specialised companies, the Resource Park will grow and strengthen over the coming years for the benefit of the Suðurnes region and the country as a whole. It is, moreover, HS Orka’s policy to arrange its operation so that it is possible to establish new resource parks in conjunction with the utilisation of geothermal energy in other areas. The multiple use of resources supports their responsible utilisation and leads to the sustainable development of the community. HS Orka continues to cultivate its Resource Park sensibly and responsibly for the benefit of society at large.

  

  

Power plants

Extraction and production

The production department performed well during the year, and there were few incidents. The operation of the geothermal systems, moreover, was similar to what it has been. 

• At Svartsengi, the total net extraction was approximately 5.6 million tonnes, or similar to that of the preceding year. 
• The total net extraction at Reykjanes was approximately 12.9 million tonnes, representing a decrease of around 6%.

• Electricity production at Svartsengi was 531.8 GWh, which is a decrease of around 3.6% between years.
• Electricity production at Reykjanes was 762.4 GWh, which is a decrease of around 3% between years. 
• The total production of SVA-REY power plants decreased by approximately 3.3% between years.

 

Hot water production at Svartsengi in 2015 was around 6.3% more than in 2014.

Table 2 shows an overview of the hot water production.

Hot water production

	Tonnes	Average flow l/s	Energy content GWh	Average power
Produced hot water 2015	13.221.908	419	724	82,7	All year 2015
Maximum monthly production	1.263.685	455	73,5	98,8	January 2015
Maximum weekly production, sales	280.844	464	17,1	101,7	Week 9 (21st - 28th  of Feb. 2015)
Maximum 24-hour production	41.377	479	2,48	103,3	25th of Dec. 2015
Maximum production per hour l/s	1.768	491	0,106	105,9	03:00-04:00 25th of Dec. 2015
Maximum production per hour MW	1.710	475	0,107	106,9	08:00-09:00 16th of Jan. 2015
Produced hot water, SALES	13.198.194	419	790	78,9	All year 2015

Installed production capacity has been around 465 l/s but was increased by 120 l/s with the introduction of a new hot channel in power plant 2 in November and is now a total of 585 l/s. No significant changes have been found in the chemical composition of the hot water distributed by HS Veitur to the Suðurnes region from the reservoirs of HS Orka. HS Orka’s cold water production to HS Veitur was a total of 6,342,000 m³.

The total production from the geothermal area at Svartsengi was similar to what it was last year, or approximately 15 million tonnes.

Re-injection of runoff water into deep wells SVAH-17 and -24 was around 9.35 million tonnes, which corresponds to approximately 297 kg/s on average over the year. Re-injection decreased by 4.6% between years. 

Geothermal production at Reykjanes

Extraction from production at Reykjanes in 2015

16 m. tonnes

Extraction from production wells at Reykjanes in 2015 was approximately 16 million tonnes, or around 3% less than the year before.

In 2015, re-injection into the geothermal reservoir at Reykjanes was a total of 3 million tonnes into wells REYH 20, 29 and 34, the majority of which went into REYH 20, or around 64 kg/s on average.

Operation and maintenance of power plants 

Reykjanes

Reykjanes
The Reykjanes Power Plant performed quite well, with the exception of a few short repair stops, mainly for repairs to the steam supply systems.

Annual regular turbine inspections as well as minor improvements to steam pipes were made. 

Unit 2 (50 MW) 23^rd–29^th of August and unit 1 (50MW) on 6^th–12^th of September.

Re-injection into well 29 with condensation water from steam turbine 1 began on 11^th of November. The incoming 10 MWA power transformer from Svartsengi for area use at Reykjanes was replaced. 

Svartsengi

Svartsengi
The Svartsengi Power Plant performed quite well, and there were few disruptions in operation. In the earlier part of the year, however, there was every chance that the hot water production would not be sufficient due to heavy use. Collection of disposal water for re-injection after improvements and addition in 2014 gave good returns in 2015. The Ormat station was run with 6 of 7 units almost the entire year, a milestone after several years of halts due to malfunctions of air-cooled steam condensers. 

Unit 3 (6 MW) was shut down 10^th–22^th of May for normal overhaul and cleaning.

Unit 12 (30 MW) was shut down 31^st of May to 29^th of June. This is the first overhaul of the steam turbine since it was brought into operation on the 20^th of December 2007. Maintenance was carried out on machinery and on the cooling tower together with minor repairs to the OV6 steam system. 

Unit 11 (30 MW) was shut down 1^st of July to 31^st of July for a 5-year regular overhaul of the steam turbine as well as a 15-year inspection of the generator. ALSTOM Norway was responsible for the task and used a new method, DIRIS Inspection, for the inspection and condition assessment of the generator interior. Other appropriate maintenance was also carried out..

Power plant 4 (Ormat station)

Power plant 4
Repairs to the condensers of units 7 and 9 were completed during the year. Unit 7 was brought on-line after several years off-line, while unit 9 could not be started up due to lack of spare parts.

The renewal of control units (PLC) for the Ormat units was begun. The first phase was to replace the control units in Ormat 4-5-6. This task was completed in the autumn. The original control units were 25 years old and outdated. The project was carried out in co-operation with the manufacturer of the units, ORMAT, and was highly successful.

Power plant 2

Power plant 2
A new hot water tower was brought into operation in the middle of the year. With its addition, the hot water production capacity was increased by 120 l/s and improves the situation in hot water production.

Improvements were made to assisting systems of the existing hot water production towers, which will lead to stabler operation of each unit. 

The annual maintenance shutdown was on 3 September for cleaning and minor repairs to the steam system and other utilities systems of the power plant. 

Hot water: distribution systems and reservoirs

Hot water
Work has been started on the design and construction of a new pumping station for increased distribution capacity of hot water from the power plant to the reservoir for Grindavík and nearby users such as the Blue Lagoon. This pumping station will allow the transfer of 120 l/s of hot water from the power plant to the reservoir as well as significantly increase the security of delivery of hot water. The pumping station is expected to begin operations in spring 2016.

The sales meters for hot water from the pumping station at Fitjar were renewed. The older metres were from 1980 and did not meet requirements.  

 Other tasks: 

Other tasks:

•  Management system and screen display system of Reykjanes Power Plant renewed.
• Repair of turbine spare rotor rotor for unit 3 begun.
• Svartsengi Power Plant painted and exterior areas tidied up. 
• Lágar water intake area, renewal of cold water pumps in pumping stations begun. 
• Station use Svartsengi, renewal of protection relays of 11 kV circuit breaker begun.

 

Electricity purchases and sales

Demand for electricity 

Demand for electricity increased significantly during the year as it had the year before. The increase in the general market was steady, while demand from major users was considerable when compared to earlier years. The biggest demand came from the increase in the electricity use of data centres and extensive use by fish meal factories that have been electrifying their plants over the past few years.

Total electricity sales

2%

HS Orka’s total electricity sales in 2015 grew by just more than 2% between years. This increase could have been greater, although to meet increased demand, efforts must be made to seek ways to increase production.

Purchase from other electricity sales

Electricity production at Svartsengi and Reykjanes into the transmission grid decreased by more than 3% between years, although there was an increase in the production of the hydropower plants that HS Orka manages. Purchases from other electricity sellers increased significantly between years, or by just more than 21% between years. 

The increased purchases can be attributed to short-term agreements with fish meal plants, requiring significantly more electricity than in the previous years, and to some extent to decreasing production. . 

Sales Peak load MW

Electricity purchases from Landsvirkjun

A large proportion of the electricity that HS Orka purchases from other electricity producers has been bound within a 12-year contract with Landsvirkjun. This contract will expire at the end of the year. Landsvirkjun plans to change the contractual form of its wholesale transactions and has yet to announce what these changes involve. In addition, HS Orka purchases electricity according to short-term contracts with Landsvirkjun and from other producers. HS Orka, moreover, has entered into longer agreements with several smaller hydropower producers for the purchase of their output. Agreements were reached during the year for the purchase of electricity from two hydropower plants, and production in these is expected to begin in 2016. 

 

 

Vatnsaflsvirkjun í skoðun 

In order to meet increased demand in the electricity market, HS Orka has been examining the manner in which it can increase production in the company’s geothermal plants as well as examining new geothermal options. The company also has plans to add to its production through smaller hydropower options. There are several such projects under examination, and the result should be available soon. At the same time, the company is working with private entities that plan to bring in new hydropower options.

An agreement was reached for the sale of a proportion of the electricity needs of a silicon plant that is to be constructed in Helguvík and begin production in 2018. In addition, a declaration of intent was signed for the sale of a small proportion of the electricity needs of a silicon plant that is to be constructed at Grundartangi. Both agreements are subject to the conclusion of a court case between HS Orka and Norðurál in Helguvík, the results of which may be expected in July 2016. 

Income from retail electricity sales increased

Income from retail electricity sales increased

20%

 

Income from retail electricity sales increased by just less than 20% during the year. Conversely, the cost of electricity purchases from other electricity producers increased by just less than 18%. Sales to aluminium plants decreased by just less than 3%. 

Energy acquisition and sales

	2015 GWh	2014 GWh	Change%
Total production of own plants	1.293,8	1.337,6	-3,3
Own use of plants	-64,9	-67,0	-3,1
Energy purchases from others	437,4	361,0	21,2
Sales on the general market	871,6	762,7	14,3
Sales to aluminium plants	739,4	761,6	-2,9
Other electricity sales	55,3	107,3	-48,5

Development projects

Developments at the power plant at Svartsengi

Runoff pipe to the sea

An agreement was reached with the Ministry of Finance for the lease of land for the pipeline. Grindavíkurbær authorities granted the construction permit at the beginning of the year. An agreement was reached with Set following an invitation to tender for the pipes and related equipment, and delivery will be in March. Ístak’s tender for surface levelling of the pipe siting and service road, moreover, was accepted, and work began in the beginning of February.

An agreement with the Southwest Iceland Nature Research Centre was signed for studies into the ecosystem of the beach at Arfadalsvík and the sea floor at the outflow of the runoff pipe. Through the agreement, the ecosystem of the area will be mapped to make it possible to monitor the effects of the runoff water on the area in accordance with the monitoring schedule.

Valve building for the pipeline to the sea

An agreement was reached with the right-holder of the land for leasing land for the valve building for the pipeline to the sea. A separate zoning plan was prepared for the site and registered in the property registry. In addition, Grindavíkurbær has granted a construction permit for the valve building that will be constructed near the beach at Arfadalsvík.

Runoff pumping station and strengthening of the freshwater utility for the power plant at Svartsengi.

Construction of the runoff pumping station was completed early in the year and the station was in full operation in February in accordance with schedules. Also completed early in the year was work on the strengthening of the flow system for freshwater from the well area in Lágar, which improved the capacity of the freshwater utility. This enabled the power plant to increase production of hot water for HS Orka in the new production tower at Svartsengi that was brought into use in the autumn.

Two boreholes drilled

A new land-use plan was approved for the drilling of two new boreholes at the edge of the Svartsengi Power Plant steam area. The plan was prepared in close co-operation with the three operators in the area and was approved as a negligible change to the existing plans. Notification of the development was sent in an assessment requirement enquiry to the National Planning Agency, which ruled that the development was without significant negative environmental impact and that a full environmental impact assessment would not be necessary. 

A development permit was issued by Grindavíkurbær, and work began on time. Due to the increased scope of the company’s drilling, a noise survey at site was performed on the drilling rig Þór which was engaged in drilling at Reykjanes and powered by electricity from HS Orka. The noise measurement will be of use in drilling projects where the drill rig in question is used, as it will provide indication of the noise levels at the drill site and its environs with greater accuracy than previously. There are considerable positive environmental effects of using electricity to power the drills, in excess of the more conventional method of using diesel machines.

Re-injection pipes at Reykjanes

The tender process for the construction of foundations and pipe work was completed at the beginning of the year. Reykjanesbær authorities granted permission for the work. An agreement had previously been reached with Set for the purchase and delivery of pipes and related equipment following an invitation to tender.

The Master Plan for Nature Protection and Energy Utilization

Data on the power development options of HS Orka was submitted to the National Energy Authority at the beginning of the year. The data included the demarcation of the exploration area of each development option as regards the third phase of the Framework Programme. The representatives of the Framework Programme were presented with studies of the development options of HS Orka that were classified as belonging to the holding category of Framework Programme 2. A field trip was undertaken with the professional teams of the Framework Programme to the areas where power development options have been defined. A close examination was particularly made of the holding category sites, i.e. Austurengjar and Trölladyngja in the Krýsuvík area. Project management made the decision that the power plant options of HS Orka in the utilisation category of Framework Programme 2 would not be re-evaluated, and they remain, therefore, in the same category.

Eldvörp – exploratory drilling

Eldvörp
The environmental impact assessment of the exploratory boreholes was completed with the publication of an environmental impact statement in September 2014. The process of land-use planning for the drilling sites and service road was subsequently initiated and ended with its confirmation during the year. Grindavíkurbær authorities then approved the development permit for drilling. Reference rules for drilling work, moreover, were prepared in conjunction with the drilling application. Two types of rule sets were issued and submitted with the application for the exploratory permit. One addresses runoff during drilling and well testing, and the other deals with the design of drill sites and their finish. The reference rules will be further developed as experience is gained during the work.

Brúarvirkjun plant

Brúarvirkjun plant
The beginning of the year saw the completion of agreements with landowners and water right-holders on the section of the River Tungufljót in the Biskupstungur region that Brúarvirkjun plant utilises. Focused preparations for the project then began, flow measurements were increased in the spring, preparations were begun for definitions in the land-use plan of the municipality of Bláskógarbyggð, a 1 m contour map for the area was created and studies were put on a professional footing. The decision was made to assess the impact of the power plant on the environment as though it were a large development option, as it is HS Orka’s policy to employ as high-quality proceedings and discussion of the development option as possible. The assessment process began in early summer, and the assessment plan was submitted in the autumn. All investigations were completed in the period from spring to autumn, and the last reports were available by the end of the year. A draft of the initial environmental impact statement was ready for review by the end of the year. 

On the basis of all flow measurements, a new flow key was determined. All indications point to the greater production than estimated in the preliminary examination of the project. Likewise, the environmental investigations indicate that the impact of Brúarvirkjun on the environment will be acceptable if due care is exercised. The preliminary design was revised and changes made to the siting of the dam and the route of the penstock. In addition, the decision was made to have two Francis units in the powerhouse rather than one. On completion of the revision, a preliminary design report was issued. The cost-effectiveness of Brúarvirkjun Power Plant will be assessed once the environmental impact assessment has been completed.

There is every indication that it will be most convenient to link the power plant by means of an underground cable to Rarik’s switchyard in Reykholt, a distance of approximately 20 km from the power plant site. There is also the option of connecting the power plant to Landsnet’s switchyard at Flúðir, which is approximately 5 km further away. 

The decision was made at a consultation meeting with the representatives of Bláskógarbyggð that the work on land-use plans would be conducted in conjunction with the municipality’s revision of the municipal zoning plan. A site for a power plant is among the items defined and presented in the new municipal zoning plan. The renewed land-use plan is expected to come into effect in the latter part of 2016.

Stóra Sandvík

Stóra Sandvík
Work was carried out during the year on an agreement on the utilisation of resources and lease of land from the landowners of Kalmannstjörn and Junkaragerði. Around mid-summer, an agreement was reached between the parties that HS Orka would obtain a formal exploratory permit, and after an examination by the National Energy Authority, a permit for exploration was issued. The explorations will take place over the next few years. At the close of the year, the agreement for access to land and exclusive rights to utilisation had been fully formulated and is now awaiting confirmation. Previously, an agreement had been reached with the same landowners for the purchase of land and resource utilisation for the Reykjanes Power Plant, and an examination is presently being made of a new area for further development of geothermal utilisation on the outer Reykjanes peninsula.

Extensive resistivity measurements were carried out and the results interpreted in three-dimensional software developed by ÍSOR experts. The measurements clearly indicate that this could be an interesting high-temperature area, and further investigations will be carried out in 2016. The area is unusual in the sense that there is very little or no geothermal surface activity in the area.

Krýsuvík

Krýsuvík
Work continued on research into the Krýsuvík area, particularly research into the natural surroundings of the areas that have been defined for the power plant development that were designated as belonging in the holding category in Framework Programme 2. Research results were then delivered to the appropriate team of the Framework Programme.

The defined power development area at Sveifluháls has a unique position among the four sub-areas in the Krýsuvík area, as the drill site is defined in the effective municipal zoning plan and the land-use plan has been in effect since 2010. Permit for deep drilling exploratory boreholes was granted in late 2011, but due to the fact that no agreement has been reached with landowners for resource utilisation and land use, no conditions for development have been attained. HS Orka’s ideas for resource utilisation in the area have always revolved around diversity in developments where it is possible to interweave geothermal developments and freshwater with the utilisation of all streams that the power development has to offer, as is done in the Resource Park in the neighbourhood of the company’s power plants at Svartsengi and Reykjanes. Negotiations with land and resource owners have been ongoing for quite some time without achieving any final conclusion. The development permit has been renewed annually over the years following the application of HS Orka and is, at present, awaiting the processing of planning authorities, who are also the landowner, of the latest application.

No further research was embarked on at or near Sandfell, as the area is seen as a peripheral area to be developed in conjunction with other utilisation of the Krýsuvík area. The renewal of the exploration permit for the Krýsuvík area is currently under review by the National Energy Authority.

Wind Power

Wind power
The mapping of wind strength on the Reykjanes peninsula was completed, and preliminary investigations into promising areas for wind power utilisation in light of wind strength and land use were carried out. Other options for harnessing wind energy were also examined, and work on these projects will be continued.

Suðurorka ehf. – Búlandsvirkjun

Búlandsvirkjun
HS Orka is owns half the shares in Suðurorka in partnership with ÍOV ehf. The company was established to work on the Búlandsvirkjun Power Plant option in Skaftártunga and has been in operation since 2009. Work continued on reaching an agreement with the landowners and water rights-holders of Búlandsvirkjun, and greater efforts were made to consult with local residents than has generally been the case in comparable projects. The delivery of the initial environmental impact report to the National Planning Agency has been deferred in the meantime. All the research that was planned has been completed, including the examination of the attitudes of tourism and outdoor recreation entities, which was seen to be lacking when the power plant development option was processed in Framework Programme 2. A certain milestone was reached in the negotiations at the turn of the year, and a decision has been made to continue with and complete the assessment process before continuing on. The negotiations process will be described in the assessment report.

VesturVerk ehf. – Hvalárvirkjun og Skúfnavatnavirkjun

Hvalá og Skúfnavatna Power Plant
VesturVerk ehf., a company in which HS Orka owns just more than half the shares, manages the project process for the harnessing of the River Hvalá and the Skúfnavatna Power Plant. The company is based in Ísafjörður. A permit was granted in the spring for an investigation into the harnessing of the River Hvalá in Ófeigsfjörður (Hvalá Power Plant) and the harnessing of the River Þverá and a section of the River Hvannadalsá for the Skúfnavatna Power Plant. Preparations began on work on the environmental impact assessment for Hvalá plant, as did environmental research and investigations into the flows and snow collection on the heath Ófeigsfjarðarheiði. The heath is the main water catchment area for the Hvalá plant and partly that of the Skúfnavatna plant. Facilities were installed on Ófeigsfjarðarheiði in late spring when two containers were transported up onto the heath to create working facilities for researchers. Flow meters were installed at key locations in the catchment area of the power plant options in the autumn, as were weather stations. 

Hard work was spent on the issues relating to links from Hvalá Power Plant and power plants that are planned in the inner part of Ísafjarðardjúp bay to the electricity transmission grid. The ideas of VesturVerk and the preferences of local residents have been well received. Meetings have been held with the representatives of Landsnet, the authorities, the municipalities involved, the Icelandic Road Administration and other concerned parties. Work will continue on this extremely important issue, which is intended to increase security of delivery to residents in Ísafjarðardjúp and in Árneshreppur and, at the same time, facilitate the utilisation of hydropower in the area to strengthen the basic systems of communities in the area, such as by means of better road systems, stronger road connections, laying fibre-optic cables and increased economic activity over the duration of the project. 

 

Construction

Safety is important

In its projects, HS Orka places extreme importance on the safety of all those involved. Risk assessments are carried out before any work begins, and all risk elements are thoroughly explained to all employees of contractors, HS Orka and the consultants involved in the project. Care is taken to ensure that safety equipment is used and that such equipment is always in good condition. Proper signage and necessary closures are ensured so that no risk from construction work is posed to public traffic and travellers. Guests who visit the project site are given a safety lecture, the appropriate safety equipment and are guided around the project site.

HS Orka’s construction work is, more often than not, carried out in sensitive natural areas, and the requirements made of contractors reflect this fact. Every effort is made to ensure that construction sites are well defined, and all traffic outside such areas and off-road traffic is prohibited. Care is taken to ensure that all conduct is exemplary, all mishaps are notified and improvements are carried out in consultation with the monitoring body involved. Particular importance is placed on exemplary finishing work at the end of all projects.

The quality management systems of both HS Orka and the contractor involved are used in all construction work. Such systems ensure quality preparations and are priceless in ensuring the progress of projects, as every effort is made to ensure proper quality and that projects are completed on time and within budget.

Runoff pipe to the sea from Svartsengi

Runoff pipe to the sea from Svartsengi
Construction on the pipeline from Svartsengi to the sea was continued during the year. Earlier, a new re-injection pipe had been laid from Svartsengi to the re-injection area at Mount Þorbjarnarfell. An agreement was reached with ÍAV following a call for tender for earthworks and the laying of DN 500 main pipeline from the re-injection site to the sea at Arfadalsvík. 

The pipe will lie through rough lava, so an eight-metre-wide road will be constructed for the pipe and its maintenance road. Access to the pipe in the north is from a maintenance road to the re-injection area, while in the south, it is from the Nesvegur road that lies between Grindavík and Hafnir. 

Earthworks began late in the year, pipe laying work will begin in March 2016 and the project will be finished in July 2016. The summer of 2015 was used to lay the outflow pipe itself 20 m outside the mean low-tide line. The pipe in question is a 140 m long, plastic-coated DN 600 steel pipe laid in a cut, anchored with rock bolts and then covered with special underwater concrete. 

The project was quite difficult. The beach was very rocky, a large proportion of the pipe was almost continuously under water and the wave action was considerable. In short, the project was extremely successful, something that can be attributed to careful preparations, powerful equipment and the experienced employees of the contractor LNS Saga, with whom an agreement was reached following a call to tender. In addition, an agreement has been reached with HH verktakar, following a call to tender, for the construction of a valve building that will be located near the beach in Arfadalsvík, the construction of which has recently begun. Particular attention was paid in all siting and design to ensure that all structures are barely visible and blend with the landscape..

Construction at Svartsengi

Increased steam extraction at Svartsengi
The decision was made to embark on increased steam extraction at Svartsengi after somewhat of a break. A deep high-temperature well, SV 25, located on the enlarged site of an older borehole (11) was drilled. SV 25 was directionally drilled to the south toward the fault under Mount Þorbjörn. The borehole reached a depth of just more than 2,000 m. 

Indications during drilling and recent temperature measurements reveal that the well will prove to be a powerful production well. Preparations for connecting the well to the power plant at Svartsengi are underway. At the end of the year, the drilling of exploratory hole SV 26 was initiated. The hole is located on an enlarged site of an older hole (18). SV 26 is directionally drilled to the east, with the goal of exploring the area to the east of Grindavík, under the slopes of Sýrlingafell. 

The geological and geophysical research carried out by ÍSOR for HS Orka indicates that the area could be promising. The exploratory borehole will verify whether this is the case. If successful, the utilisation area of the power plant at Svartsengi will be considerably enlarged. As before, it is Jarðboranir hf., with the electrically powered drilling rig Þór, the largest drilling rig in Iceland, together with an extremely experienced crew, who drill these deep and difficult boreholes.

Air extracted through lava

Over the past few years, HS Orka has, in partnership with Verkís, been developing the idea put forward by Albert Albertsson to draw clean air from shallow boreholes, i.e. to use the lava as a filter. A hole was drilled at Reykjanes that has been monitored for three years. Measurements show that the air is so clean that it could even be used in an operating room. As a result, the decision was made to drill a comparable hole near the staff building at Svartsengi. 

The idea is to ventilate the building if the air in the lava proves to be as clean as at Reykjanes. The first results of measurements indicate that the air is very clean, although there is more heat and moisture in the lava near the staff building, so the air needs to be dried before being used. The plan is to connect the hole to the building in 2016 once further measurements and improvements have been made.

Re-injection

Re-injection at Reykjanesi

100 kg/s

A great deal of effort was spent on the re-injection project at Reykjanes during the year. A more than 2,000 m long, directionally drilled re-injection well had previously been drilled to the south near Sýrfell, well RN 33. RN 33 has been tested, and the suitable long-term re-injection is believed to be around 100 kg/s. At the beginning of the year, a more than 2,500 m long, directionally drilled re-injection well was drilled to the north-west from the same drilling site near Sýrfell, well RN 34. 

Testing has not been fully completed, although it is believed that suitable long-term re-injection into well RN 34 will be between 80 and 120 kg/s. Construction of 500 mm re-injection piping made of steel was tendered at the same time as drilling was carried out. An agreement was reached with Ellert Skúlason for the earthworks and with Framtak for the laying of the pipes and making connections. The project is now being finished, and testing and re-injection will follow. The re-injection fluid is approximately 75% subterranean seawater and 25% condensation water.

Utilisation of low pressure steam at Reykjanes

Efforts have been spent on experiments to utilise the unused low-pressure steam at Reykjanes for the production of hot water. Small-scale experiments look promising, and larger scale experiments will be continued in 2016. The goal is to link the fish drying companies at Reykjanes to a heating utility. These companies are currently using high-pressure steam which could be put to better use in the power plant to produce electricity.

Increased utilisation of geothermal steam at Reykjanes

To prepare for the planned low-pressure machine at Reykjanes, extensive separator experiments have been carried out. The low-pressure machine is intended to use low-pressure subterranean seawater which is not being used at present. Due to the significant extent of deposits from subterranean seawater at lower pressures and temperatures, the utilisation of this fluid is extremely difficult. Experiments have been carried on a scale of 1:10 based on the planned power plant, and all technical problems have been solved as the fluid boils at 5 bar and again at just over 1 bar. Experiments have shown that the steam that forms is sufficiently clean for the machine and the power is estimated at 20–30 MW in electricity production.

Closure of borehole in Krýsuvík

HS Orka owns and operates a borehole in Krýsuvík that has been used to heat the treatment facility of the Krýsuvík Association. At present, the experts of HS Orka are of the opinion that the well is not sufficiently safe, as there is a hole in the well head emitting steam under 14 bar pressure. As a result, the decision was made to close the well and heat the buildings at Krýsuvík with electricity. A high-voltage cable was laid in Krýsuvík in 2014 through the collaboration of HS Orka and HS Veitur. The installation of a boiler together with the necessary piping was completed last autumn. Thereafter, work began on closing the hole for good, a particularly difficult job to say the least. The first attempt at closing the hole was unsuccessful; the old heating utility pipes which were to be used for pumping failed. The decision was made to postpone further actions until the worst of the winter conditions have passed and then to continue.

Back-up power installed in the main offices of HS Orka

A back-up generator, a diesel driven generator, was installed at the offices at Brekkustígur during the year. The generator starts automatically if electricity is cut off, in which case the activities in the offices of HS Orka and HS Veitur can continue as normal despite problems in the national grid, which is important if the loss of electricity is in conjunction with an emergency situation of some sort.

Real-time data on drilling information

Information technology is useful in projects, both to facilitate and ensure information flow and to ensure quality. Project websites are used where design data, specifications and all data that are created in the project are accessible to those involved in the project at all times and in any location. The experts and managers of HS Orka have real-time web access to all drilling information in drilling operations in high-temperature areas that are ongoing 24 hours a day, every day, just as though they were at the drill site.

Monitoring geothermal systems

HS Orka carefully monitors the geothermal resources with which the company is entrusted. Close attention is paid to geothermal systems as well as the geothermal processing. ÍSOR regularly monitors, on behalf of HS Orka, the temperature and pressure in boreholes, the chemical content and possible changes, the enthalpy of the geothermal fluid, steam quality, earthquakes and subsidence. The engineering firm Vatnaskil operates an extensive calculation model for HS Orka using software called Tough2. The calculation model mimics the behaviour of the geothermal systems in the Reykjanes peninsula and predicts their long-term development. New information which increases the accuracy of the calculations is added every year. All this information is subsequently assessed by the experts of HS Orka, who use it to assess the long-term impact of the processing and make decisions with the intention of ensuring that the processing is fully sustainable.

Research in Eldvörp
Extensive geological and geophysical research at Elvörp was continued during the year. New resistivity measurements were added and the results interpreted in three-dimensional software developed by ÍSOR experts. All data available on Eldvörp has been put in a three-dimensional model in software named Petrel, where the experts of ÍSOR and HS Orka can compare the different data and gain an overview of the results of various studies. Conclusions have been drawn wherein the goals of the planned exploratory drilling has been clearly delineated, the likely results of different drilling projects assessed and an overall view ensured. In addition, the previously mentioned calculation model of Vatnaskil was used to assess the probable effect of the planned processing in Eldvörp will have on Eldvörp area as well as on Svartsengi, as it is well known that the areas are connected.

Research projects

Research projects

HS Orka participates in various research and development projects. The Icelandic Deep Drilling Project (IDDP) continued preparations for deep drilling at Reykjanes. The extension of borehole RN-15 was specifically examined in this respect. Discussions with the Norwegian oil company Statoil Petroleum AS as regards its re-involvement in the IDDP project continued over the course of the year. On 12^th of November 2015, a 5-year agreement was signed with IDDP to participate in the extension of well RN-15 (well IDDP-2) to a depth of 5 km. 

A separate agreement was signed on the same date with HS Orka on the participation of Statoil in the cost of drilling and casing the upper part of RN-15 down to a depth of 3.5 km. In the autumn, moreover, it became clear that the grant application of HS Orka and its partners in the EU’s Horizon 2020 energy programme would be approved, and an agreement thereto was signed in mid-December. The project is entitled DEEPEGS and involves, among other things, participation in drilling, research and testing well IDDP-2 at Reykjanes. The project began formally on 1^st of December 2015 and will last for four years. The plan is to begin drilling work on IDDP-2 in mid-summer 2016 and to complete the drilling that same year.

Seismometers on land

30

Seismometers in the ocean

24

IMAGE og EU

HS Orka is party to a multi-national research project (IMAGE) which is supported by the European Union’s (EU’s) 7th Framework Programme and ends in 2016. The goal of the project is to develop new methods to investigate the deep roots of geothermal systems. Reykjanes is one of three high-temperature areas specifically examined. Installed were 30 sensitive seismometers on land and 24 in the ocean around the Reykjanes peninsula. A total of 84 seismometers, therefore, monitored tectonic movements in the production areas of HS Orka until autumn 2015. Results are expected over the next two years and will inevitably be connected with the planned drilling of IDDP-2.

EU Horizon 2012

Seismometers in total

84

During the year, HS Orka took part in the preparation of two other EU applications to the EU Horizon 2002 energy programme, GEOWELL and PRESCO, and the former was approved. GEOWELL aims for improved technology in drilling and processing high-temperature areas and will begin in 2016. HS Orka, moreover, participates and sponsors Icelandic research projects within GEORG in co-operation with Icelandic and foreign bodies, all of which aim toward a better understanding of the deep roots of high-temperature systems and the improved utilisation of such areas.

 

Environmental issues

Leader in environmental matters 

HS Orka seeks to be a leader in environmental matters and continuously works on improvements and new opportunities to minimise the impact of its operations on the environment. In the autumn, HS Orka signed Festa’s Climate Declaration, which involves taking on the obligation of setting goals and following up on such goals by means of actions to reduce the emission of greenhouse gases and reducing waste formation. HS Orka is currently engaged in setting goals and will be publishing its goals by mid-year 2016. 

Geothermal utilisation 

2015 brought new challenges in environmental issues when measurements confirmed a previously unknown environmental aspect linked to geothermal utilisation at Reykjanes. After processing began in 2006, the accumulation of metal-rich deposits at the well heads of production well quickly became apparent. Studies have shown that the deposits contain various precious metals, such as lead, zinc, gold and silver. 

New measurements have now confirmed that the deposits also emit increased natural alpha and beta rays, traceable to the concentration increase in radioactive lead and polonium. The accumulation is extremely localised in the pipe near the well heads at Reykjanes Power Plant. Measurements have also confirmed that such accumulation does not occur at the company’s power plant at Svartsengi. This is the first time that radiation of this nature has been measured in Iceland, although it is well known in connection with mining as well as oil and gas processing in many parts of the world. 

Alpha and beta rays are extremely short range. The radiation is so short range that people are not exposed to radiation from the deposits even when standing very close by. It is the assessment of the Icelandic Radiation Protection Institute that the radiation from the deposits is so minor that there is no risk posed to humans, animals or the environment. The deposits are cleared from the pipes once a year. They are collected together and stored appropriately in accordance with instructions from the Icelandic Radiation Safety Authority. 

Extensive study

HS Orka is currently working with Institute of Earth Sciences at the University of Iceland to increase understanding and knowledge of the radiation in the deposits that form in the energy processing from the geothermal system at Reykjanes. An extensive study is currently being carried out on the deposits as well on the geothermal fluid. The results of these measurements will be used to quantifiably explain what causes the build-up of radioactive materials in the deposits at Reykjanes.

Human resources

The year 2015 was the first year of operation after the formal division of employees between HS Orka and HS Veitur. Two employees left the company, others were recruited to replace them and an additional three new positions were filled. 

Two new employees were added at Svartsengi, one assistant in maintenance and one in the control equipment division. Two employees retired due to age, one assistant in maintenance and one in the control equipment division. 

The main office at Brekkustígur saw the addition of an attorney, a geochemistry expert and an expert on renewable energy.

According to the service agreement with HS Veitur, HS Orka purchases services in the field of IT, services and maintenance of property. HS Orka sells services to HS Veitur in the field of finances, human resources, quality and safety.

Human Resource

Piecharts

There were a total of 58 employees at HS Orka at the end of 2015. Including the Board, summer staff and temporary employees, there were 70 employees who were paid wages in 2015.

HS Orka total employees 

58 employees

Quality Management

A great deal of effort has been spent in recent years on the development and adoption of a quality management system that accords with ISO 9001. During the first months of 2015, a great deal of effort went into completing the ISO 9001 requirements that remained in order to be able to begin the certification process. The certification process started in June with the first certification audit. 

The audit was a success, although there yet remained work on completing the performance of internal audits of several rules of procedure and processes. As a result, the decision was made to have the second certification audit in the beginning of October 2015. In November 2015, BSI (the British Standards Institution) confirmed that HS Orka meets all the requirements of the standard and the company received its ISO 9001 certification. 

 

Certification 2015

ISO 14001

Following the ISO 9001 certification, the decision was made to embark on a status assessment of the ISO 14001 environmental management standard and the OHSAS 18001 safety management standard. The status assessment, which took place in the beginning of December, came out quite well, and the company plans to obtain further certification according to these standards next year

Quality management system

Developing, adopting and operating a quality control system according to ISO 9001, ISO 14001 and OHSAS 18001 is a major project involving all aspects of the company. The commitment of management as well as the participation of employees is extremely important. The benefits of the quality control system are becoming ever clearer, as can be seen by the daily work of all employees who make an effort to do better all the time and thereby ensure constant improvements. The quality culture within the company has grown considerably and will continue to do so.

Safety and health issues

Various safety and health issues were attended to during 2015. Monthly safety meetings were held with employees, as were meetings and presentations to review safety issues in general, such as accident frequency, seasonal tasks and risk assessments in the run-up to maintenance projects. Several training courses were held during the year to increase the certification level and understanding of employees. Speakers were variously employees of HS Orka, employees of VER or experts from the business sector. The courses included training for boom crane certification for employees operating boom cranes and courses on the risks posed by arcing and protection from it for employees involved in work in high-voltage areas. In continuation of this course, special protective equipment was purchased for use in movements of defined switches and electrical equipment.

Safety and health issues

Work on signposting and labelling the work areas and roads of HS Orka was completed. Work continues to be carried out in accordance with a schedule that provides for the installation of gates on all access roads to power plants and other work sites. This is done to ensure the safety of employees and to warn the general public of possible risks in the areas in which the company operates.

The Safety Committee met regularly and held four major scheduled meetings during the year in addition to several smaller meetings.

Preventative action prize

At the beginning of 2015, HS Orka was awarded the preventative action prize of VÍS which was awarded at the preventative action conference No Excuses in Safety Issues held at Hilton Reykjavík Nordica in February. The VÍS preventative action prize is awarded for exemplary preventative measures and safety matters. Ásgeir Margerisson, CEO, accepted the prize on behalf of the company.

Immediate notifacation

Employees are encouraged to provide immediate notification if they suffer an accident and/or an incident during work for HS Orka. Staff can easily register any accidents or incidents that occur into the database of HS Orka. The goal of such registrations is to ensure that accidents or mishaps are not repeated, to make the workplace safer and to ensure that information on accidents and mishaps is brought to the attention of the parties to whom such incidences are to be reported. 

Accident and incident registration

A registry of accidents and incidents that occur at HS Orka is maintained. Accidents and incidents are divided into three categories according to their level of seriousness and lost-time from the workplace.

Contractors accidents

Accident by region

• Incident/accident, no lost-time
• Accident causing 1–7 days lost-time
• Serious accident causing lost-time of more than 7 days

A total of 44 accidents/incidents were registered in 2015 in HS Orka’s operation. There were seven cases in which the employees of HS Orka were involved, and 37 accidents/incidents were reported by contractors working for the company.

Further breakdown of accidents/incidents involving HS Orka employees:

• Three lost-time accidents with a total of 35 lost days
  
• Three first aid accidents
  
• One incident – damage to equipment

The frequency of lost-time accidents is based on international standards, where the frequency of accidents is compared based on 100 worked man-years or 200,000 working hours.

Three lost-time accidents

There were three lost-time accidents at HS Orka during the year. The frequency of work-related lost-time accidents at HS Orka in 2015, therefore, is 5.22. In comparison, there was no lost-time accident in 2014, the frequency that year, therefore, was 0.00. There were two lost-time accidents in 2013, making the frequency of lost-time accidents that year 2.96.

The accident frequency of contractors working for HS Orka is monitored, and contractors are under obligation to notify the appropriate entity of any accidents. A total of 37 accidents/incidents were reported.

• One lost-time accident – 14 lost days
  
• Eight first aid accidents were reported
• 22 incidents – damage to equipment
  
• Four traffic incidents
• One hazardous circumstance
  
• One environmental incident
  

The community

HS Orka place great importance in participating i community projects. In 2015, as in previous years, the company generously supported a number of cultural and sporting activities in numerous locations throughout Iceland. The majority of the projects, however, were in the Suðurnes region, where the main offices and power plants of the company are located. The company focuses on active participation in the community through support to diverse projects to assist those who need assistance or which improve and enrich the community. 

The company has participated in the collaborative projects of the Association of Employers at Reykjanes with the largest companies in the area, with aim of promoting and strengthening the area. 

HS Orka lit up the Ljósanótt (Light Night) at Reykjanesbær as it has done for the past four years, contributing significantly to the magnificent fireworks display at the festival. 

Visits

An important aspect of the operation of the company is to educate the public about the harnessing of geothermal energy and the methodology of multiple use that is the foundation of the Resource Park, and large numbers of guests come every year to see the company’s power plants at Svartsengi and at Reykjanes. The exhibition Power Plant Earth is located in the Reykjanes Power Plant, where the number of guests has risen every year since it was set up. The exhibit is interactive and about the solar system and what energy use options are available here in Iceland and elsewhere.

The operator of the exhibition welcomed around 5,000 guests last year.

The company itself receives groups from companies that are in related operations, customers and student groups from many parts of the world. In addition, there are numerous photo opportunities and interviews handled by staff. All for the purpose of promoting the area and the operation. 

The total number of guests, i.e. guests that visited the exhibition and guests that the company itself received, may be estimated to have been around 7,000–7,500 in 2015.

Number of visitors 2015

7.000 - 7.500

Reykjanes Hikes

For the eighth year in a row, HS Orka sponsored, in partnership with other companies in the Suðurnes region, the project Reykjanes Hikes. A total of 11 hikes were offered around and about the Reykjanes peninsula during the period from June to August. The hikes were on Wednesdays under the guidance of Rannveig Garðarsdóttir.

The hikes are at varying levels of difficulty and can be anything from a light stroll up to longer and more difficult walks in the stunning environment of the Reykjanes peninsula. In each hike, the guide relates diverse information about the area. A guest guide is invited on each hike.

11 hikes in 2015

746 hikers

The employees

Considerable changes were made to the human resources of HS Orka when just more than 80 employees, who had been responsible for tasks for HS Veitur according to a service agreement, were transferred over to HS Veitur. The decision was subsequently made to create a staff association for HS Orka. The founding meeting of the new staff association was held on 30^th of September with the attendance of 26 HS Orka employees. Proposals for statutes applicable to the new association were voted on and passed unanimously. Thereafter, the Board was elected and currently consists of Egill Jóhannsson, Kristín Birna Ingadóttir, Matthías Örn Friðriksson and Páll Kristinsson. The object of the association is to strengthen collaboration, promote good morale and enliven the social life of HS Orka staff.

New Board elected 

During the first meeting of the new Board, Egill was elected chairman and Matthías was elected treasurer. The first event held by the Board was a Christmas buffet held at Lava bar in the Blue Lagoon and was considered a resounding success. The association plans to hold several events in 2016 in order to foster the team spirit of the employees.

WOW Cyclothon

In addition to events held by the staff association, there are numerous things in which staff participate outside working hours. Several employees of HS Orka participated during the year in the WOW Cyclothon challenge where the goal was to cycle the entire Ring Road in Iceland. The team consisted of five employees from HS Orka and five employees from HS Veitur. The plan in 2016 is to send a team that is entirely made up of HS Orka employees. The competition is extremely difficult and is highly demanding on both the physical and mental strength of competitors. Participation in such competitions strengthens team spirit and brings people together, both those competing and not least other employees who excitedly follow the achievement of their colleagues and are there to celebrate with them at the end of the competition. 

New golf club

Several of the company’s employees are active golfers and have participated in the competition series held by the shared staff association of HS Orka and HS Veitur. Following the division, the decision was made to create a new golf club unconnected with the staff associations of the companies in which the employees of HS Orka and HS Veitur can participate. The plan is to hold a grand competition series this summer and to visit the golf courses in Iceland in friendly competition. In addition, the companies have jointly held a competition series with three other companies, each company taking its turn to hold a series. The joint team of HS Orka and HS Veitur won the competition last year and will, therefore, have a title to defend when the series is held in the autumn of 2016.

 

Online Annual Report

HS Orka has undergone various changes in the last year. One of the developments is that instead of releasing a printed version of the annual report, it is now published online. This is in line with the CSR policy of the company.

A pdf-version of HS Orka‘s annual report is available below.