Hydroelectric power potential from Iceland's many swift rivers and waterfalls is high, and is considered the key to further industrial development. An estimated 45 billion kWh per year is economically exploitable from the five principal glacial rivers, while the total potential is estimated at 64 billion kWh per year. Net installed capacity in 2001 was 1,383,000 kW, of which about four-fifths was hydroelectric. Electric energy output in 2000 was 7,600 million kWh, with hydroelectric output accounting for 83% and alternative sources for 17%. A government rural electrification program is designed to bring inexpensive public power to every family in Iceland. Peat, formerly an important source of heat on the farms, has been virtually abandoned.
Hot springs are used for heating greenhouses in which vegetables, fruit, and flowers are raised, and for heating public buildings. Since 1943, most of Reykjavík has been heated by water from hot springs at Reykir, some 160 km (100 mi) from the city. About 85% of the population lives in homes heated with geothermal power. In recent years, however, a significant decline in flow from geothermal drill holes has raised concern that this energy resource may not be so boundless as was once thought.