The Karahnjukar (Kárahnjúkar) hydroelectric project consists of 4 dams and electrical generating stations. It is currently being built in the north/central highlands of Iceland, and is expected to be complete in 2009. It is one of the tallest rock dams in the world (193 meters/633 feet) and it has a relatively thin concrete skin over the rock to make the structure impervious to water.

The project is embroiled in enviromental controversy; the process will change the flow of several large rivers, and it was given government approval outside of the normal environmental review process. Although the dams will produce 'green' electricity, essentially all of the electricity will go to power a new aluminium smelter in Reyðarfjörður, and this plant may have significant environmental impacts (depending on whose argument you believe). Some economists are also concerned over the plans for the project, as the Icelandic people are building a very expensive power plant for one customer, who has been given long-term guarantees for innexpensive electricity.