SEV, the power company of the Faroe Islands, has secured a 15-year loan from Nordic Investment Bank (NIB), so it can move forward with plans to build a pumped hydro storage facility in Vestmanna, which is a town on the island of Streymoy.
The DKK 250 million (€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, said the NIB. It will push water uphill using surplus wind and solar energy, through four turbines with a combined capacity of 40 MW when required, it added.
“The agreement with NIB is only one of several loan agreements, since SEV has made other loan agreements with financial institutions and insurance companies located in the Faroe Islands, the Nordic countries and the US,” SEV said in a press release. “An agreement that involves DKK 650 million in available credit is part of the funding. This agreement is an association between Nordic and Faroese finance corporations, explicitly Skandinaviska Enskilda Banken and Betri Banki, BankNordik and Lív. A part of the funding is likewise borrowed from some American health insurance companies.”
The DKK 1.3 billion Mýruverkið II project is scheduled to go online in the 2027-28 period. However, SEV still needs to secure important authorizations, including the building permit, permission from the conservation authorities, and approvals for the environmental impact of the pumped storage system.
SEV currently serves 29 municipalities on the Faroe Islands. It owns the archipelago's electricity grid and 98% of its total installed electricity production capacity, including a 261 kW solar power plant inaugurated in December 2019.
“The pumped storage system in Vestmanna is the greatest project that SEV has ever initiated, and it is likewise one of the most impressive projects the Faroe Islands have seen,” the company said.
According to the International Renewable Energy Agency, the Faroe Islands had around 59 MW of renewable energy installed by the end of 2021. The islands have four diesel plants totaling 100 MW, six hydroelectric plants with a combined capacity of 37 MW, and several wind power plants equaling 18 MW.
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