Why China's geothermal energy sector remains underdeveloped

The country is zeroing in on other renewable sources.

Several trends emerge when analysing the global geothermal competitive landscape; firstly, Japanese stakeholders play a dominant role in the development of geothermal projects globally, according to BMI Research.

Secondly, China's role in the global geothermal competitive landscape remains limited despite the prevalence of Chinese companies in the global power sector and finally, development finance will play a crucial role in minimising financial risks in the development of geothermal projects in both Indonesia and Kenya.

The global competitive landscape in the geothermal power sector is made up of diverse players, ranging from engineering companies, state-owned utilities, development banks and international financial institutions (IFIs).

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In terms of where these companies are domiciled, the locations are not particularly diverse and are largely restricted to those countries that already have an established domestic geothermal industry or are looking to exploit their untapped resources.

By analysing the company information in our Key Projects Database (KPD) and compiling our views on the global geothermal industry, we have identified a number of key themes relating to the competitive landscape.Chinese companies do not have a large footprint in the geothermal sector, highlighted by their absence in our KPD.

This is notable given the significant role Chinese firms play in other segments of the global power market, for example coal, nuclear, solar and hydropower - in line with China's Going Global investment strategy and the Chinese government's Belt & Road (B&R) initiative.

China's domestic geothermal industry is under-developed with just under 30MW of geothermal capacity installed as of end-2015. Wind and solar have instead been the two technologies of choice for the Chinese government, given the lower costs relative to geothermal energy. As such, Chinese companies have limited equipment, experience and expertise in developing such projects abroad.