The facility is located 177 m (581 ft) above sea level in the southwestern part of the country, near Þingvellir National Park and the Hengill mountain range, about 30 km east of central Reykjavík.

Plans for utilizing the Nesjavellir [ˈnɛːsjaˌvɛtlɪr̥] area for geothermal power and water heating began in 1947, when boreholes were drilled to evaluate the area's potential for power generation.

The station produces approximately 120 MW of electrical power; it also delivers around 1,100 litres (290 US gal) of hot water 82–85 °C (180–185 °F) per second - with a heating capacity of 300 MWt, serving around half of the space heating and hot water needs of the Capital Region, the rest provided by lower temperature fields and the Hellisheiði Geothermal CHP plant.

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