The geothermal district energy sector in Iceland has been developing since the 18th Century. The development commenced when a hot spring area in Reykjavík was designated and constructed for open air laundering. At the same time, indirect utilisation took place by drilling in geothermal fields to mine sulphur. In 1900, experiments with drilling shallow geothermal wells and transferring hot water via pipelines for space heating began, and in 1908 a small-scale district heating system came on line. Later, other direct utilisation methods emerged and the first greenhouse in Iceland heated with geothermal heat commenced operation in 1924. The first steps towards eliminating Iceland´s dependence on coal and oil for space heating were taken in 1928, when the city of Reykjavik initiated its drilling programme with the aim of gaining access to hot water.
In 1930, a district heating system was constructed in Laugardalur, Reykjavik. The system supplied a hospital, a swimming pool, a school and 60 homes with geothermal hot water, marking the beginning of the district heating revolution in Iceland. The next big step for Iceland was harnessing geothermal steam for power generation, and the first turbine in Iceland powered by geothermal steam commenced operation in 1944. Today, over 90% of all industrial facilities and residences in the country are heated by geothermal water and roughly 30% of all electricity generated in the country comes from geothermal power plants. The remaining electricity demand is supplied by hydropower plants, making Iceland’s electricity 100% renewable.