Iceland has continued to develop the use of direct geothermal, even though it is already at a very high level. The search for sufficiently good boreholes in regions without direct geothermal for district heating has continued and will continue in the next few years. In 2013, 92% of citizens were served by district heating and, as displayed on the graph, 100% of this district heat was generated from direct renewables and recycled heat.
The most important legal framework for district heating in Iceland is the Energy Law, which dates back to 1967. In 2003, a special piece of legislation was passed on the electricity market, but district heating is still primarily subject to the Energy Law, which provides certain rights to municipalities, including a monopoly right to run a district heating system, provided that at least 51% of the organisation is publicly owned.
District heating does not face any real competition in Iceland. 92% of all houses use geothermal space heating and 3-4% use electricity heated district heating systems. Furthermore, it is expected that heat pumps may be installed in some cases for colder areas. The only barrier to a complete role out of district heating in Iceland is the lack of geothermal energy sources of sufficient quality in certain areas and also the long distances between buildings in some rural areas.