The Northern Lights exist in the outmost layer of the atmosphere.
They are created by electrically charged particles that make the thin air shine, not unlike a fluorescent light.
They can be seen in auroral belts that forms 20-25 degrees around the geomagnetic poles, both the north and the south.
The Northern Lights, also called Aurora Borealis are one of the most spectacular shows on this earth and can frequently be seen in Iceland from September through April on clear and crisp nights.