NIB Signs 15-yr Loan Deal with SEV to Finance Construction of Pumped Hydroelectric Energy Storage System

The Nordic Investment Bank (NIB) signs a 15-year loan deal with Faroe Islandic power company SEV to finance the construction of a pumped hydroelectric energy storage system to allow for new renewable energy capacity on the Faroe Islands.

The investment contributes to the Faroe Islands’ target of achieving 100% fossil free energy generation and onshore consumption by 2030.

The DKK 250 million (EUR 33.60 million) loan will co-finance a system consisting of mountain caverns and a tunnel connecting the existing Myrarnar upper reservoir and the Heygadalur lower water reservoir through eight pumps with a total capacity of 70 MW, pushing water uphill using surplus wind and solar energy, letting the water down through four turbines with a combined capacity of 40 MW when required.

The project is planned to be constructed between 2022 and 2027 and the estimated total project cost is DKK 1.3 billion.

“This renewable energy project is like a giant battery, storing energy while capable of generating electricity at scale in an instant. It will thus be crucial in helping the Faroe Islands reduce carbon emissions and hit its ambitious climate change targets,” says André Küüsvek, NIB President & CEO.

The Elfelagið SEV power company is an inter-municipal community owned by all 30 municipalities on the Faroe Islands. The company owns the electricity grid and 98% of total installed electric production capacity on the Faroe Islands.

Thermal energy accounts for nearly over 60% of all the electricity produced, with the remainder consists of hydropower and wind capabilities.