In a world where China's clean energy dominance is usually framed as an unstoppable juggernaut of solar and wind, Jordan Schneider and his anonymous contributor "Soon Kueh" deliver a startling counter-narrative: the country's most abundant renewable resource is being systematically ignored. While the rest of the globe fixates on the intermittent nature of solar and wind, this piece argues that China's failure to scale geothermal power is not a technological blind spot, but a calculated economic outcome driven by entrenched interests and policy inertia. For listeners tracking the future of global energy security, this is a crucial reminder that having the resources doesn't mean you'll use them if the incentives are misaligned.
The Crowding-Out Effect
The authors make a provocative claim right out of the gate: China's renewable sector is booming, but it is a boom built on a narrow foundation. They note that in 2025, clean energy industries contributed to 90% of the country's investment growth, "making the sectors bigger than all but seven of the world's economies." Yet, despite this massive scale, the authors argue that the sheer dominance of wind and solar is actively suffocating other options. Schneider writes, "The short version of the story is that solar and wind are so dominant (and their supply chains so involuted) that they are crowding out investment at basically every level."
This is a sophisticated take on market dynamics. It suggests that the success of one technology can become a barrier to entry for another, even a superior one in terms of baseload reliability. The authors point out that while China leads the world in wind and solar production, these technologies are "fundamentally intermittent." The logical gap, as they see it, is the failure to deploy geothermal, which could provide the steady, non-intermittent power needed to balance the grid. However, the piece correctly identifies that wind turbines and solar panels are "easier to mass produce and transport logistically," unlike geothermal which requires "site-specific engineering and custom-made equipment." This logistical friction creates a natural preference for the modular technologies, regardless of the grid's long-term needs.
"Wind and solar remain dominant because of their competitive costs and long-term industry support."
Critics might argue that this framing underestimates the sheer difficulty of geothermal exploration. The authors acknowledge that site exploration is technically challenging, noting that "over 80% of the Levelized Cost of Electricity (LCOE) is driven by capital costs, and exploration accounts for around 5%." But they rightly push back that these barriers are not insurmountable for a state with China's capacity. The real issue, they suggest, is that the state has chosen not to clear the path.
The Policy Vacuum
The commentary shifts to a damning analysis of Beijing's regulatory environment. The authors highlight a stark contrast between the robust support for wind and solar versus the silence surrounding geothermal. They point out that the 14th Five-Year Plan, which sets the tone for China's energy future, merely states to "promote geothermal energy development in an orderly manner." As Schneider puts it, "In reality, places where geothermal energy development is most feasible have already been dominated by wind and solar, suppressing local demand for geothermal energy."
This observation is critical. It reveals that policy isn't just about what you encourage; it's about what you allow to crowd out the competition. The authors note that since 2021, China has "stopped setting clear targets for geothermal development." Without these targets, local governments have no mandate to prioritize geothermal over the more lucrative wind and solar projects that drive their GDP and employment figures. The financial disincentives are compounded by the Resource Tax Law revision in 2020, which reclassified geothermal energy and subjected it to "higher taxation, making it less financially viable."
The piece draws a compelling parallel to the history of hydropower, noting that "hydropower has always been a preferred option for the past few decades, coinciding with the CCP's rise to power." Just as the privatization of the State Power Company of China in 2002 led to a "scramble for hydropower," the current landscape is shaped by the profit motives of state-owned enterprises that have already invested heavily in wind and solar infrastructure. The authors argue that "coal still remains popular among local governments and corporations because they are 'sources of employment, investment and revenue,'" creating a triad of entrenched interests—coal, wind, and solar—that leaves geothermal stranded.
The Technical and Economic Reality
To understand why this matters, the authors delve into the mechanics of geothermal development, specifically the potential of Hot Dry Rock (HDR) technology. This is where the piece connects to broader energy history. As the authors explain, HDR systems "employ similar technology to oil and gas fracking," where deep wells are drilled to fracture rocks and circulate water to generate heat. This technology is not new; the US, Germany, France, and Japan began researching HDR development well before China. Yet, China's research remains "mainly still in the experimental stage."
The authors provide a sobering look at the current electricity mix. Despite China's vast potential, the International Energy Agency estimates that in 2023, China generated a "measly 195 GWh of electricity from geothermal sources," compared to nearly 900,000 GWh from wind. The disparity is staggering. The only significant commercial plant, the Yangyi Geothermal Power Station in Tibet, struggled for decades due to "low electricity prices and aging equipment." The authors detail how development stalled for 20 years because "local governments would not have been able to personally profit from these projects," illustrating how the lack of a direct financial incentive for local officials can paralyze national energy goals.
"The reality that geothermal power generation is significantly riskier and more expensive to develop makes it an even less compelling option."
This is the crux of the argument: without a massive, targeted subsidy or a regulatory mandate that overrides local profit motives, geothermal cannot compete. The authors note that "subsidies of geothermal plants are negotiated on a case-by-case basis, which increases the financial risks for private developers." In a system where certainty is king, the case-by-case approach is a death sentence for capital-intensive projects.
Bottom Line
Schneider and "Soon Kueh" have crafted a compelling critique of how policy inertia and market dominance can stifle innovation, even in a state as powerful as China. Their strongest point is the identification of the "crowding-out" effect, where the very success of wind and solar creates a structural barrier to the adoption of baseload renewables like geothermal. The piece's vulnerability lies in its assumption that the state could easily override these market forces if it wanted to; in reality, the fragmentation of interests between local governments, state-owned enterprises, and the central planning apparatus may be far more resistant to change than the authors suggest. For the global energy sector, the takeaway is clear: technological potential means nothing without a political and economic architecture designed to support it.
"The short version of the story is that solar and wind are so dominant (and their supply chains so involuted) that they are crowding out investment at basically every level."
The most urgent question this piece raises is whether China's current trajectory will leave it vulnerable to the intermittency of its own renewable boom, or if a policy shift is imminent to unlock the geothermal potential buried beneath its surface. Until then, the gap between China's ambition and its execution remains a critical blind spot in the global energy transition.