Orkuveita ReykjavíkurSustainable Quality of Life

Guðmundur ÞóroddssonCEO

June 16th 2007

Overview

About the CompanyThe Geothermal ResourceThe Global PerspectiveNew Innovations and Developments

Orkuveita Reykjavíkur Orkuveita Reykjavíkur operates distribution

networks and provides: Electricity

To about 58% of the population of Iceland Hot Water

To about 67% of the population of Iceland Cold Water

To about 55% of the population of Iceland Sewage system

To about 53% of the population of Iceland

Orkuveita Reykjavíkur operates in 20 municipalities

Quality systems Orkuveita Reykjavíkur operates in

accordance with:- ISO 9001 - ISO 14001- OHSAS 18001- HACCP

The Power Generation is certified as Green by TÜV in Germany

Trends in power generation in Iceland

Shift from electricity generation by hydro to geothermal

New geothermal from less than 100 MW in 1995 to 1000 MW in 2012

New Geothermal more and more without heat production

More and more of marginal areas being heated by geothermal as fossil fuel becomes more expensive and technology becomes better

Trends in geothermal power generation

Faster development of geothermalShorter time from first permit to generationBigger initial units – lower costCompetitive with hydro in Iceland In the last decade Iceland has been the biggest

developer of new geothermal in the worldBig demand for participation in overseas projectsDirect use like district heating spreading

Eurasian plate

American plate

Iceland’s Unique Position The only place

where the ridge reaches surface

The plates drift apart, about 2.5 cm/year

Main effects:EarthquakesVolcanic

activityPresence of

the geothermal resource

The Atlantic ridge

2000

Exploiting the Geothermal Reservoir

Advanced drilling technology

Application of properwell- and wellhead equipment

Targeting the producing zones

Casing off uppermost layers

Directional drilling increases success rate in many reservoirs

Secure for long-term operation

Flow Diagram

Reykjavík burning coal 1932

Geothermal Power Plant – Nesjavellir

Electricity 120 MWe

Hot water 300 MWt

1640 l/sec (432 gallons/sec) 83°C (181°F)

23 boreholesdepth 1000 – 2000m temperatures up to 380°C

(716°F)

Hellisheiði Power Plant Project Combined heat and power plant

Total projected output 300 MW electricity, 400MW thermal

Objective is to meet increasing demand for electricity and hot water in the industrial and domestic sectors of Iceland

Output from first stage, 90 MW of electricity, was delivered to Nordic Aluminium in fall of 2006

Increased need for hot water in Reykjavik as soon as 2009

Three additional areas under development, total capacity of 400 MW electricity

The Stern Review and Iceland

The aluminium companies are relatively footloose

Expected global action to mitigate GHG emissions is already acting as a key in driving energy-intensive sectors to countries with renewable energy sources

Prospects of Iceland becoming Europe’s largest aluminium producer

“Exporting Electricity”Estimated Aluminium Production in Iceland by end of

each year

0

200

400

600

800

1000

1200

1400

1600

2005 2006 2007 2008 2009 2010-2015Year

Alcoa II

Century II

Alcoa I

Century I

Alcan

The Global Hot-spots

Global Geothermal Electricity

24 countries generate power from geothermal resources

Costa Rica, France, Iceland, Indonesia, Italy, Kenya, Mexico, Nicaragua, and Russia all show an important increase of relevant power plant installation activities

Source: Bertani 2005

Global Geothermal Electricity

Source: Bertani 2005

Global Geothermal Direct Use

Capacity 27,824.8 MWt Use 261,418.0 TJ/yrUse 72,621.9 GWh/yr Capacity Factor 0.30The countries with the largest installed

capacity and annual energy use were the USA, Sweden, China, Iceland and Turkey, accounting for about 66% of the installed capacity and 60% of the annual energy use.

Source: Lund et al, 2005

Global Geothermal Direct Use

Source: Lund et al; 2005

Consciousness of global warming

“Society's dependence on fossil fuels is jeopardizing social and economic progress and our future security. Fortunately, there are many policy and technological options available to avert the impending crisis, but we need increased political will to use them.”

Secretary General Ban Ki-moon, June 5 2007 EC’s 20 by 2020 Geothermal energy seen as a

contributor to the solution Considerable lack of knowledge and

adequate training in harnessing geothermal resources

Utilization of geothermal energy will increase in the near future

CO2 Sequestration Scientific project with

University of Iceland, Columbia University (USA), Université Paul Sabatier (Toulouse, France) Laboratory work Sequestering CO2 from

Hellisheiði plant into boreholes

Combines with carbon-low basaltic rock and crystallizes

Iceland Deep Drilling Project

Scientific project with other Icelandic power companies and NEA.

Drilling of 4-5 km deep hole to reach 400-600°C supercritical hydrous fluid.

Increased power output, perhaps by an order of magnitude.

First hole to be drilled in 2008.

www.or.is