British Minister of State for Energy Charles Hendry signed a memorandum of understanding with his Icelandic Finance Minister Oddny Haroardottir that details bilateral energy affairs.
Hendry said the agreement would build on the close working relationship with Iceland in the fields of geothermal power and conventional energy resources.
"This sort of approach can both enhance our energy security and deliver low carbon electricity in an affordable way," he said.
Both sides, the agreement says, "decide to exchange information and cooperate to support the development of the deep geothermal sector in the U.K., including in the supply of heat to district heating networks."
Geothermal energy has the potential to supply about 20 percent of the electricity needs for the United Kingdom, The Guardian newspaper in London reports. The government, however, doesn't have the subsidy program to support the technology.