High Quality Content by WIKIPEDIA articles! Over 80% of electricity in Iceland is generated in hydroelectric power stations. While geothermal energy is used for heating (and increasingly for electricity generation), the hydroelectric power stations, historically all run by Landsvirkjun, are central to the existence of Iceland as an industrialized country.The largest power station by far is Kárahnjúkavirkjun (690 MW), which is being built in the area north of Vatnajökull to generate electricity for a new factory for the production of aluminum.