Because of the special geological situation in Iceland, the high concentration of volcanoes and geothermal energy are very often used for heating and production of electricity. The energy is so inexpensive that in the wintertime, some pavements in Reykjavík and Akureyri are heated.
In Iceland, there are five major geothermal power plants which produce about 26% (2006) of the country's electricity. In addition, geothermal heating meets the heating and hot water requirements for around 87% of the nation's buildings.
In 2006, 26.5% of electricity generation in Iceland came from geothermal energy, 73.4% from hydro power, and 0.1% from fossil fuels.
Consumption of primary geothermal energy in 2004 was 79.7 PJ, or 53.4% of the total national consumption of primary energy, 149.1 PJ. The corresponding share for hydro power was 17.2%, petroleum 26.3% and coal 3%.
The first two of the following power plants produce both electricity and hot-water for heating purposes, whereas the other three produce only electricity.
- The Svartsengi Power-Plant, situated in the south-west of the country, near the International Airport at Keflavík on the Reykjanes peninsula. It currently 12/2007 produces 76.5 MW of electricity, and about 475 litres/second of 90 °C hot water (ca. 80 MW). Surplus mineral rich water from the plant fills up a nearby lake and popular tourist bathing resort Bláa Lónið (Blue Lagoon).
- The Nesjavellir Power-Plant, situated in the south of the country, near the lake Þingvallavatn and Hengill volcano. It currently produces 120 MW of electricity, and about 1800 litres/second of heating water (ca. 300 MW).
- The Krafla Power-Plant, situated in the north-east of Iceland near lake Mývatn and the volcano Krafla - hence the name. It produces 60 MW of electricity, with an expansion to 210 MW on the drawing boards.
- The Reykjanes Power-Plant, situated in the south-western tip of the country (to the west of Svartsengi), went on line end of 2006, two turbines are producing 100 MW. Further expansion is being planned.
- The Hellisheiði Power-Plant, to the south of the Hengill volcano is being built, two turbines with together 90 MW went on line end of 2006 and one 34 MW low pressure unit end of 2007. Further expansion is in progress.