In 1906, the Engineer General, Thorvald Krabbe, researched the possibilities for electrical lightning in the Seydisfiord Area. On February 29th 1908, he attended the council meeting at Seydisfiord, where he handed over two proposals from Copenhagen for the construction of a hydroelectric power station on River Fjardara.
On October 15th 1912, the council decided for the offer from Siemens-Schuckert in Copenhagen. This company sought assistance from its mother company in Berlin, where a young, Icelandic electrical engineer, Gudmundur Hliddal, worked, and he was sent to Iceland to oversee the project.
The construction work started in the spring 1913. A dam was constructed just above farm Fjardarsel. From there a 500 m long pipeline was laid to the power station house. The steel pipe was 46 cm in diameter, and the drop was 51,5 m. A 75 Hp AC generator was installed. The 3,000 Volts discharged from the power station were reduced to 208 Volts for domestic use and 120 Volts for lightning. Five voltage regulators were installed for the small town. This was the first high voltage AC system of the country.
On October 13th 1913, the electrical lights were turned on in the town. Five days later the town’s people celebrated and expressed their gratitude for the good work. In 1924, a new 75 Hp generator was installed. The original generator was restored in 1933, and the high voltage grid was extended to the Fjardarstrond Area.
In winter water shortage during extremely cold spells was a problem, which increased with the increased demand. In 1946, another dam was built at Lake Heidarvatn to increase the water reserves, and the capacity of the power station was increased. The dam elevated the water level by 3 metres and increased the lake’s volume by 1,7 million cubic metres. In 1954, a 30 Kilovolt, 20 km long grid was built to connect the town Egilsstadir with the power station. When the hydroelectric power station was built on River Grimsa, both power stations became parts of the East Iceland Electrical Works. Rarik bought the Seydisfiord Electrical Works on January 9th 1957, and overtook the operation in 1958. The capacity of The Fjardarsel Power Plant is 160 kW.
In 2006 the enlargement project of the power plant was commenced.