When Ingolfur Arnarson sighted land on the voyage which would make him the first settler in Iceland, he threw the pillars of his high seat overboard and relied on the gods to direct him to where he should settle. His slaves found them washed ashore in a bay where "smoke" rose out of the ground. Therefore they called it Reykjavik -"Smoky Bay". But the smoke after which Iceland's capital is named was not the result of a fire, but was rather steam rising from hot springs.
Ancient records only mention the use of geothermal springs for washing and bathing. The best known examples are the Thvottalaugar (Washing pools) in what is now Laugardalur in Reykjavik, and the hot pool where saga writer Snorri Sturluson bathed at his farm in Reykholt in western Iceland.
The first trial wells for hot water were sunk by two pioneers of the natural sciences in Iceland, Eggert Olafsson and Bjarni Palsson, at Thvottalaugar in Reykjavik and in Krisuvik on the southwest peninsula, in 1755-1756. Further wells were sunk by Thvottalaugar in 1928 through 1930 in search of hot water for space heating. They yielded 14 hires per second at a temperature of 87°C, which in November 1930 was piped three kilometers to Austurbacjarskoli, a school in Reykjavik which was the first building to be heated by geothermal water. Soon thereafter more public buildings in that area of the city as well as about 60 private houses were connected to the geothermal pipeline from Thvottalaugar.
The results of this district heating project were so encouraging that other geothermal fields began to be explored in the vicinity of Reykjavik. Wells were sunk at Reykir and Reykjahbd in Mosfellssveit, by Laugavegur (a main street in Reykjavik) and by Ellidaar, the salmon river flowing at that time outside the city but now well within its eastern limits. Results of this exploration were good. A total of 52 wells in these areas are now producing 2,400 liters per second of water at a temperature of 62-132°C.
Hitaveita Reykjavikur (Reykjavik District Heating) supplies Reykjavik and several neighboring communities with geothermal water. There are about 150.000 inhabitants in that area, living in about 35.000 houses. This is way over half the population of Iceland. Total harnessed power of the utility's geothermal fields, including the Nesjavellir plant, amounts to 660 MWt, and its distribution system carries an annual flow of 55 million cubic meters of water.