Geothermal energy has played an important role in the lives of Icelanders since ancient times, as is reflected in the large number of place names that derive from it. Most prominently, this includes the capital Reykjavík ("The Bay of Smokes"), which it is said to have received its name from the steam (smoke) that Ingólfur Arnarson, the first settler in Iceland, saw rising from hot springs as he approached the shore.
For a long time after, the main use and consumption of geothermal energy was for washing and bathing. However, by far the biggest progress in the utilization of geothermal energy in Iceland only occurred in the last century, especially in its latter half. The first use of geothermal heat in Icelandic greenhouses was at the start of the 20th century; at about the same time, people started to use geothermal heat for space heating and swimming pools. The oil crises in the seventies accelerated the further development of geothermal utilization for space heating in the country. At that time, the Icelandic government put a big emphasis on reducing oil imports and pushing further geothermal research and the development of geothermal heating utilities.
Geothermal heat has also been used for the production of electricity. The first geothermal power plant was built in 1969; today there are seven of them. Their installed capacity in year 2011 was 663 MWe; in that year 40% of geothermal utilization in Iceland was for electricity production. The resource has furthermore been used for snow melting, aquaculture, greenhouse cultivation, industrial drying and manufacture of skin care products, salt and methanol, to name a few.
The enclosed timeline shows the development of geothermal energy in Iceland: