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State Aid

State aid: No aid in power contract between Landsvirkjun and Norðurál




The EFTA Surveillance Authority (ESA) concluded today that Norðurál's power contract with Landsvirkjun, the Icelandic national power company, does not involve state aid.

The Icelandic authorities notified ESA, in May 2016, of a third amendment to a 1997 power contract concluded between Landsvirkjun and Norðurál Grundartangi ehf., for the operation of the existing aluminium plant in Hvalfjarðarsveit. ESA has reviewed the contract, taking into consideration the economic calculations relied on by Landsvirkjun at the time of signature.

ESA underlines that the application of the market economy investor principle requires an individual assessment of the terms of each contract. Accordingly, Landsvirkjun has provided ESA with extensive information.

In the amended contract, electricity price will be tied to the market price for power on the Nordpool Elspot power market instead of prices on the aluminium markets as it was under the previous agreement. ESA has found that the power contract is in line with standard commercial practices of competing power companies in the Nordic countries and that the level of risk associated with it, is in line with what a private power producer would consider acceptable in the same situation.

A non-confidential version of the decision will be published in the register of state aid decisions on ESA's website, normally within a month.

For further information, please contact:

Ásdís Ólafsdóttir
Communications Officer
tel. (+32)(0)2 286 18 97
mob. (+32)(0)490 57 63 49


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