It has long been known that temperature increases with depth inside the Earth, as phenomena such as volcanic eruptions and hot springs show. With increasing exploitation of geothermal energy in the 20th century, the meaning of this term has become narrower, and nowadays it is mostly used for discharges of hot water and steam in geothermal fields. In the Icelandic language, there are numerous examples of the use of the equivalent term in the last two hundred years, with the earliest example from the late 18th century.
The prerequisite for the presence of geothermal energy thus defined is that the crust is sufficiently hot and with enough fractures and leaky rock formations to allow flow of water, which carries the heat from deeper and hotter formations to the surface. These conditions especially exist in volcanically active countries, like Iceland, at the boundaries of tectonic plates. Earthquakes are an unmistakable sign that the Earth’s crust is breaking and moving. In the June 2000 earthquakes in South Iceland, water veins in the crust either widened or became narrower, as seen in a number of boreholes in the area. Thus, it is not surprising that the most seismically active regions in Iceland have significant geothermal activity.
The crust in Iceland is relatively hot because its lower part is largely composed of magma intrusions that did not reach the surface and instead solidified at depth. The crust is hottest in the volcanic and crustal extension zones and becomes cooler farther away as it gets older. It is believed that most high-temperature geothermal fields in Iceland, all of which are in the active volcanic zones, are underlain by magma intrusions, which act as the main heat source for the geothermal systems. The so-called low-temperature systems can be found where the crust is cooler but warm enough to yield 50-150°C hot water. In Iceland, areas where geothermal water has not been discovered are sometimes referred to as being cold, but more accurate would be dry areas, because there is always some heat in the crust, even when there is no water to carry this heat to the surface.
Reference: Guðmundur Pálmason