The  When Viking settlers arrived in Iceland in AD874, in what is now Iceland’s capital, Reykjavík, one of the first sights that greeted them was columns of steam rising out of the hot springs from which the city takes its name. What they found when they came ashore was a landscape poor in the timber and peat, fuels which they had burned in their homelands, but they were remarkably quick to adapt to their new environment.

 In the centuries that followed, Icelanders became adept in learning to utilise the natural forces, which on more than one occasion threatened to destroy their country, and many local place-names ring with the names of the hot springs used for purposes ranging from bathing and washing to baking bread.


  The introduction of imported fossil fuels came with the arrival of coal in the 18th century, and continued with the oil and gas consumption that dominated the first half of the 20th century. Today, more than 1,200 years after the country’s settlement, Iceland’s energy policy is set towards once again returning the nation to the self-reliance that was a fact of life for most of its history.

 According to an old Icelandic saying, “necessity teaches a naked woman to spin cloth”. Living in a country lacking in any fossil fuel resources has taught Icelanders to become highly creative in their use of indigenous renewable energy resources.

 Why is Iceland one of the world’s greatest potential sources of renewable energy?

 Located just south of the Arctic Circle, Iceland is located on both a hotspot and the Mid Atlantic Ridge, which runs right through it. This combined location means that geologically the island is extremely active with an eruption every five years on average.

Despite its fiery nature, about one-tenth of Iceland’s landmass is covered by glaciers, from whose icecaps flow many powerful rivers, providing the nation with a wealth of hydro-power.

Iceland has succeeded in doing what many consider impossible: transforming its energy system from fossil fuels to clean energy. The use of geothermal energy in Iceland is highly cost-effective, reliable, clean, and socially important. It has also dramatically increased the quality of life for the inhabitants.

During the course of the 20th century, Iceland went from what was one of Europe’s poorest countries, dependent upon peat and imported coal for its energy, to a country with a high standard of living where practically all stationary energy is derived from renewable resources.

Today, Iceland is a world leader in terms of the share of renewable resources that the country uses in its energy mix.  While the rest of the world still depends on fossil fuels for 80% of its energy, around 82% of Iceland’s primary energy consumption is met by domestically produced renewable geothermal energy and hydropower.

Direct use of geothermal resources is mostly used for space heating in Iceland. Today almost 90% of the population’s households are heated by geothermal water and the remainder mainly by hydroelectricity. This achievement has enabled Iceland to import less fuel, and has resulted in lower heating prices. Nowhere else does geothermal energy play a greater role in proving a nation’s energy supply. Almost three-quarters of the population live in the south-western part of the country, where geothermal resources are abundant.

Iceland’s energy use per capita is among the highest in the world due to a great deal of the energy produced going to power intensive industries, and the proportion of this provided by renewable energy sources exceed other countries.  Demand for electricity in Iceland increased dramatically with the opening of the country’s first aluminium smelter in 1969. Today 80% of the nation’s electricity use, is due to these kinds of power intensive industries, and is considered a way of exporting clean energy.

Iceland has hydroelectric power stations with a total installed capacity of 1.880 MW.