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Friday, August 19, 2022
HomeEnergy and the EnvironmentSEV’s ‘greatest project’ ever: Faroe Islands utility secures funding for giant pumped...

SEV’s ‘greatest project’ ever: Faroe Islands utility secures funding for giant pumped hydro energy system

Faroese utility SEV has secured sufficient funding for its plan to develop a major pumped hydro energy system in Vestmanna, the utility firm announced in a statement on “the greatest project that SEV has ever initiated” and “one of the most impressive projects the Faroe Islands have seen.”

Meanwhile the utility pointed out that final permission for the giant Mýruverkið II project is yet to be obtained.

“SEV has now received the necessary funding for the pumped storage system in Vestmanna — also called Mýruverkið II,” the announcement read. “The funding is provided by Faroese and foreign lenders.”

The statement went on to say that the final part of the funding process was sorted out with the CEO of the Nordic investment bank NIB and the manager and committee chairman at SEV signing a 250-million DKK (33.6M EUR) loan agreement.

However, it added, this “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. An agreement that involves DKK 650 million in available credit is part of the funding.”

“The overall debt which stands at DKK 1.3 billion (174.7M EUR) has been refinanced,” the statement continued, “and the new funding of DKK 0.9 billion has been provided, which will be spent on the pumped storage system in the next few years.”

Awaiting permission

According to the publicly owned utility, 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.”

Expected to be completed in 2027-2028, Mýruverkið II “is a matter of importance for the future of sustainable power supply, since it is expected to reduce the consumption of oil by 55 GWh on a yearly basis,” SEV said. “This is equal to 12,000 tonnes of oil, and this amount will likely reduce the CO2 emission by 35,000 tonnes.”

With funding for the pumped storage system provided, SEV is currently looking to “obtain certain permissions in order to start the project,” we’re told, including building permit, permission from conservation authorities and approval regarding environmental impact of the pumped storage system.

Pumped hydro energy storage is a well established type of hydroelectric energy storage used by electric power systems for load balancing. Through this method energy is stored by way of gravitational potential energy — in the form of water that is pumped from a lower elevation reservoir to a higher elevation. Low-cost surplus electricity is typically used to run the pumps during off-peak hours; then, in periods of high demand, stored water can be released through turbines to produce electric power. 

Even though the pumping process itself can make a pumped-energy facility a net consumer of energy, the system increases revenues for utilities by allowing increased sale of electricity during periods of peak demand. However, if the upper lake collects significant rainfall and/or is fed by a river, the facility can be a net energy producer much like a traditional hydro power plant.

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