Licensing

Based on the provisions of electricity laws No. 65/2003, the following activities are subject to licensing requirements:

According to Article 4 of the Electricity Act, the Energy Regulatory Authority of the National Energy Authority is not responsible for issuing operating licenses based on electricity laws, as specified in paragraph 2 of Article 24 of the Electricity Act.
For new transmission activities, a license from the Energy Regulatory Authority of the National Energy Authority is required according to paragraph 2 of Article 9 of the Electricity Act if it is not specified in the implementation plan of the system plan approved by the National Energy Authority in accordance with Article 9 of the Electricity Act. The processing of licensing applications follows the provisions of Article 34 of the Electricity Act. The Energy Regulatory Authority of the National Energy Authority can attach conditions to the license regarding safety, efficiency, delivery reliability, electricity quality, and the government's policy on the development of the electricity transmission system.
To establish and operate distribution systems or to cease such operations, reference is made to Article 13 of the Electricity Act.
A license from the Energy Regulatory Authority of the National Energy Authority is required for distribution utilities to maintain a separate tariff for rural areas where distribution costs are demonstrably higher than in urban areas, as per paragraph 2 of Article 17 of the Electricity Act.
Regarding electricity transactions, reference is made to Article 18 of the Electricity Act. A ministerial license is required to operate in the electricity market, as per Article 18 of the Electricity Act.
A license from the Energy Regulatory Authority of the National Energy Authority is required to utilize and sell energy released from loading in the form of heat from their own production processes and equipment that uses energy (waste heat).
A license from the Energy Regulatory Authority of the National Energy Authority is required to remove or trim trees or tree growth in the right-of-way area of the electricity transmission or distribution system when disputes arise between the transmission or distribution company and the landowner or the land custodian regarding such actions, as per paragraph 4 of Article 21 of the Electricity Act.

For further information and guidance on the above matters, refer to the following subsections:

Instructions for Applying for a License to Establish and Operate a Distribution System

According to Article 13 of the Electricity Act, a license from the National Energy Authority is required to establish and operate a distribution system in a designated distribution area and to cease such operations. The license grants an exclusive right and obligation to distribute electricity within the relevant area. The distribution utility must be an independent legal entity and must always be majority-owned by the state, municipalities, and/or companies wholly owned by these entities.

Special licenses cannot be transferred or pledged as collateral for financial obligations without the permission of the National Energy Authority.

In the regulation on the implementation of the Electricity Act (1040/2005), there are guidelines for applications for licenses to establish and operate distribution systems in specific distribution areas.

Application for a license

An application for a license to establish and operate a distribution system should be in writing and must include the following information and documents:

Name, national ID number, and address of the applicant.
Financial statements, either the balance sheet or financial and operating statements from the previous year.
Definition of the service area and a description of the distribution system.
Operational and development plan for the system for the next 3 years.
Agreement for connection to the transmission system.

Criteria for Special License

The conditions of the special license for distribution and the rights to maintain it are as follows:

The distribution company must be an independent legal and tax entity.
The distribution company must demonstrate financial viability at all times and prepare a business plan for the next 36 months, which shall be reviewed annually. The board and management of the distribution company must inform the National Energy Authority if the foreseeable financial viability of the company is not ensured.
The distribution system must be connected to the transmission system. However, the National Energy Authority may grant exemptions from this requirement under special circumstances, such as when dealing with small isolated areas.
Requirements for the safety of the electricity supply, the quality of electricity, and delivery security must be met at all times.
The distribution company must comply with environmental protection requirements set by laws and governmental regulations in force at any given time.
The distribution company must remove structures and equipment at its own expense when their use ceases, and it is foreseeable that they will no longer be utilized. However, with the approval of the relevant municipality, the National Energy Authority may authorize that structures and equipment do not need to be removed.
Other conditions derived from laws and governmental regulations other than the Electricity Act may apply.

Handling and Fee

The granting of a license shall be based on an objective and transparent assessment of the application. Before issuing a license, the National Energy Authority shall seek the opinions of the relevant municipalities, and these opinions shall be received within two months from the date of the request.

The National Energy Authority shall publish the application for a license in the Official Gazette, providing the concerned parties with an opportunity to review the application and submit their viewpoints within four weeks from the publication. The applicant shall bear the cost of such advertisement.

Based on the submitted data, opinions, and comments, the National Energy Authority shall evaluate whether the applicant meets the conditions for obtaining the license. If the National Energy Authority does not consider the applicant to meet the requirements, it may refuse to grant the license or impose conditions it deems necessary in this regard. The decision to refuse the license shall be justified.

The National Energy Authority shall make a decision within two months from the date all data has been received from the applicant, and all opinions and comments are available. A fee of 50,000 ISK plus 10 ISK for each inhabitant shall be paid upon receipt of the license.

If the licensee does not comply with the provisions of the Electricity Act, regulations on the implementation of the Electricity Act, the conditions of the license, related agreements, or other legal provisions, the National Energy Authority shall issue a written warning and provide a reasonable period for correction. If the licensee does not comply with the warning within the specified time frame, the National Energy Authority may revoke or amend the license. In case of serious violations or neglect, or if it becomes clear that the licensee cannot fulfill its obligations according to the license, the National Energy Authority may revoke the license without a warning.

According to Article 30(1) of the Electricity Act, administrative decisions made by the National Energy Authority based on the Electricity Act regarding projects that are not related to granting, revision, or revocation of licenses under Articles 4(1), 9(2), and 11(2) are subject to appeal to the Electricity Disputes Board. The appeal to the board must be in writing and must be submitted within 30 days from the date the party to the case was notified of the decision.

Transmission structure

Licensing Instructions for Transmission Activities

Orkustofnun (The National Energy Authority) has compiled the following guidelines for applying for a license for transmission structures. The purpose of these guidelines is to provide applicants with clearer guidelines than what is currently available in electricity laws and regulations. The guidelines cover various aspects such as overhead lines, underground and submarine cables, substations, and voltage stations.

License to Conduct Electricity Trading

Guidelines for Applying for a License to Conduct Electricity Trading

A license from the National Energy Authority is required to engage in electricity trading. Such a license does not include special privileges or other exclusive rights for the licensee.
The license to conduct electricity trading cannot be transferred or used as collateral for financial obligations without the consent of the National Energy Authority.
The license to conduct electricity trading will only be granted to independent legal and tax entities. Applicants must demonstrate financial viability to fulfil obligations related to the business. Sales companies must possess a minimum capital of ISK 15,000,000.
Sales companies must provide a 36-month plan outlining the scope of electricity sales and how they will supply electricity to meet sales agreements. Such a plan must accompany the application for a license. The National Energy Authority may request a guarantee based on the estimated scope of electricity sales.
The license will be granted based on an objective and transparent evaluation of the application. The National Energy Authority will assess whether the applicant meets the requirements for obtaining the license. If the National Energy Authority deems it inappropriate to grant the license or finds conditions necessary, it may refuse the license or impose conditions, supported by reasoned argument.
A fee of ISK 50,000 shall be paid for an electricity trading license, and the fee shall be paid upon receipt of the license.
If the licensee fails to comply with the Electricity Act, regulations on the execution of the Electricity Act, conditions of the license, or other provisions, the National Energy Authority will issue a written warning and provide a reasonable deadline for rectification. If the licensee does not comply with the warning within the specified timeframe, the National Energy Authority may revoke or amend the license. In cases of serious violations or neglect, or if it is evident that the licensee cannot meet its obligations according to the license, the National Energy Authority may revoke the license without issuing a warning.
According to Article 30(1) of the Electricity Act, decisions made by the National Energy Authority on matters not concerning the granting, revision, or revocation of licenses under Article 4(1), Article 9(2), and Article 11(2) are subject to appeal to the Electricity Supervisory Committee. The appeal must be made in writing and presented within 30 days from the date the party was notified of the decision