Reykjavik, Iceland


Reykjavik has the world's largest and most sophisticated geothermal district heating system, which has used natural hot water to heat its buildings and homes since 1930. Today, geothermal powers the entire city - with an electricity distribution network harnessing 750 MW thermal power from steam, and a water distribution system generating 60 million cubic meters of hot water. The use of this natural resource has massively reduced the City's dependence on fossil fuels – making it one of the cleanest cities in the world. CO2 emissions have been reduced from 1944 to 2006 by up to 110,000,000 tons, delivering savings of up to 4 million tons CO2 every year. Geothermal has also contributed to Iceland's transformation from one of the poorest nations to one that enjoys a very high standard of living.

What is it?

  • Geothermal heat comes from the Earth's core, where temperatures may reach 4,000-7,000°C (7,200 to 12,600°F);
  • Geothermal heat can come to the surface with water through fissures, cracks and permeable rock. A number of countries and continents, including Iceland, sit over these naturally occurring heat supplies.
  • The special geological situation of Iceland with its high concentration of volcanoes means it has an obvious opportunity to use geothermal energy. Iceland gets its heating and electricity from this natural resource via five geothermal power/heating plants, which turn the heat into clean energy for the entire country – half of whose residents live in the City of Reykjavik.

How does it work?

  • Reykjavik Energy company uses both water from low temperature fields (temperature below 150°C at 1000 m depth) for direct heating of houses and energy from high temperature fields (temperature higher than 200°C at 1000 m depth) for generating electricity and hot water for house heating;
  • Water from low temperature fields can be used directly for heating houses without any heat exchangers or treatment, through the 1,300 km distribution system into homes;
  • The hot water is either re-circulated and reheated by adding hotter water, or drains directly into the sewer system;
  • Reykjaviok Energy serves about 170,000 people, using 63 million cubic meters of water, of which 7 million is recycled backflow water;
  • “Space” heating accounts for 85% of hot water from Reykjavik Energy, while bathing and washing accounts for 15%. Space heating includes: heating houses, swimming pools and some greenhouses, and increasingly for snow melting on roads and sidewalks.

The process works in three ways:

1. Steam collection

  • Steam naturally mixed with water is conveyed from boreholes through collection pipes to the separation station where the water is separated from the steam;
  • Excess steam and unutilised water go into a steam exhaust outside the separation station;
  • From the separation station, steam and water proceed by separate pipes to the power plant at a pressure of about 12 bars and a temperature of 190°C;
  • The steam is conveyed to steam turbines where electricity is generated. Each turbine produces 30 MWe of electricity;

2. Heating cold water

  • The cold water is taken from five boreholes near Grámelur at nearby Lake Thingvellir. It is pumped to water tanks next to the power plant;
  • From there it goes to be heated in the condensers and heat exchangers mentioned above;
  • The water is heated up to 85-90°C;
  • The cold water is saturated with dissolved oxygen that corrodes steel after being heated;
  • To get rid of the oxygen, the water is boiled under low pressure, releasing the dissolved oxygen and other gases from the water. During this process, the water temperature cools to 82- 85 degrees;

3. Production of electricity 

  • In 1990, the City built a powerful geothermal station at Nesjavellir. The main purpose of the plant was to provide hot water for the Reykjavik area – 27km away;
  • Freshwater is heated by geothermal steam and hot water exchangers;
  • The power plant started generating electricity in 1998 when two 30 MW steam turbines were put into operation;
  • In 2001, a third turbine was installed and the plant enlarged to a capacity of 90 MW then to 120 MW in 2005, today total generation is 674GWh;
  • A second, 90 MW plant, was built 2006 at Hellisheidi. The high temperature fields utilized by Reykjavik Energy are both within the volcanic zone about 30 km east of the capital, Reykjavik;

Energy Fund

The Icelandic Government is committed to its geothermal energy industry. In the late 1960s it set up an Energy Fund to further increase the use of geothermal resources in the country, by bringing together the former Electricity Fund and the Geothermal fund. Over the past decades, it has granted numerous loans to companies for geothermal exploration and drilling. Where drilling failed to yield expected results, loans were then converted into grants.

Financial savings

  • Financial savings were calculated in 1995 for the period 1944 to 1995 to be just below 3,000M USD, compared to the cost of heating by oil;
  • The total financial savings from 1944 to 2006 would amount to about 4,290M USD;
  • For the year 2006, the financial saving is estimated to be close to 140M US$ (difference between geothermal and oil);
  • The price of geothermal water is one third of the cost of heating with oil;
  • Evaluation of initial investment or installation of the system is difficult because it began on a small scale in 1930, with large development during World War II, in 1960 and between 1970 and 1980. Rough estimated value is somewhere around US$ 773,000,000 to build the system today.

CO2 reduction

  • Total CO2 reductions are between 2.5 and 4 million tons annually;
  • About 7,500 t CO2 are released into the air each year from the Nesjavellir Power Plant;
  • The calculation of CO2 saving is based on other possible alternatives - in the case of Reykjavik this would have been the use of fossil fuels such as gas, oil or coal. Fossil fuels have to be imported to Iceland, therefore the CO2 saving is much higher.

Energy production

  • There are five geothermal plants in Iceland – producing 26.5% of the country's electricity and 87% of the housing and building heating needs (2005);
  • In Reykjavik 73.4% of energy comes from hydropower, with 0.1% of energy coming from fossil fuels;
  • Consumption of primary geothermal energy is 53.4% (2004) of the total national consumption of primary energy;
  • Hydropower made up 17.2%, petroleum 26.3%, and coal 3% of national consumption;
  • Almost 29% of primary energy in Iceland is imported a little over 71% is domestic renewable energy.

Next steps

Geothermal energy will increasingly be used for generating electricity in Iceland.


What cities can use geothermal

Geothermal heat can be used by countries that sit over Magma hot spots, including the following:

  • Volcanic regions that border the Pacific Ocean (known as the Ring of Fire) such as the USA, Mexico, Central America, Japan, Phillipines, Indonesia and New Zealand:
  • Volcanic chains that form along mid-ocean or continental rift zones: Iceland and Kenya;
  • Hot spots where magma plumes continuously ascending from deep in the mantle, such as the Hawaiian Islands and Yellowstone

There are also low temperature geothermal resources, which can be used for direct applications, such as heating houses, recreation, green houses and industry. Geothermal heat pumps are increasingly used for house heating where there are no geothermal manifestations.

UNU Geothermal Training Program

The United Nations University Geothermal Training Program and Iceland's National Energy authority established a training program in 1968 to help developing countries with considerable geothermal potential build specialists on geothermal exploration and sustainable development. The program annually offers specialised training in various fields of geothermal studies. In 2005, 338 scientists and engineers from 39 countries had completed training. UNU-GTP graduates are, in many countries, among the leading specialists in geothermal research and development. Source: Reykjavík Energy, June 2003