Orkuveita Reykjavíkur Sustainable Quality of Life Guðmundur Þóroddsson CEO June 16th 2007

Overview About the Company The Geothermal Resource The Global Perspective New 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 ISO OHSAS 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 geothermal Shorter time from first permit to generation Bigger initial units – lower cost Competitive with hydro in Iceland In the last decade Iceland has been the biggest developer of new geothermal in the world Big demand for participation in overseas projects Direct 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: Earthquakes Volcanic activity Presence of the geothermal resource The Atlantic ridge

2000 Exploiting the Geothermal Reservoir Advanced drilling technology Application of proper well- 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 MW e Hot water 300 MW t 1640 l/sec (432 gallons/sec) 83°C (181°F) 23 boreholes depth 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

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 MW t Use 261,418.0 TJ/yr Use 72,621.9 GWh/yr Capacity Factor 0.30 The 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 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

CO 2 Sequestration Scientific project with University of Iceland, Columbia University (USA), Université Paul Sabatier (Toulouse, France) Laboratory work Sequestering CO 2 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 °C supercritical hydrous fluid. Increased power output, perhaps by an order of magnitude. First hole to be drilled in 2008.