Energy Shift
A Visual Crash Course on Geothermal Energy
A Visual Crash Course on Geothermal Energy
Geothermal is a lesser-known type of renewable energy that uses heat from the Earth’s molten core to produce electricity.
While this unique feature gives it key benefits over solar and wind, geothermal also suffers from high costs and geographic restrictions. Because of this, few countries have managed to produce geothermal energy at scale.
In this infographic, we’ve used a combination of diagrams and charts to give you a high level overview of this sustainable energy source.
How Geothermal Works
Geothermal energy is produced by accessing reservoirs of hot water that are found several miles below the Earth’s surface. In certain parts of the planet, this water naturally breaks through the surface, creating what’s known as a hot spring (or, in some cases, a geyser).
When accessed via a well, this pressurized water rises and rapidly expands into steam. That steam is used to spin a turbine, which then drives an electric generator.
Further along the process, excess steam is condensed back into water as it passes through a cooling tower. Finally, an injection well pumps this water back into the Earth to ensure sustainability.
Where Is Geothermal Energy Being Used?
As of 2021, global geothermal power generation amounted to 16 gigawatts (GW). However, only a handful of countries have surpassed the 1 GW milestone.
Country | Installed Capacity (GW) |
---|---|
🇺🇸 U.S. | 3.7 |
🇮🇩 Indonesia | 2.3 |
🇵🇭 Philippines | 1.9 |
🇹🇷 Turkey | 1.7 |
🇳🇿 New Zealand | 1 |
🇲🇽 Mexico | 1 |
🇮🇹 Italy | 0.9 |
🇰🇪 Kenya | 0.9 |
🇮🇸 Iceland | 0.8 |
🇯🇵 Japan | 0.6 |
🌎 Rest of World | 1.1 |
To give these numbers context, consider the following datapoints:
- America’s 3.7 GW capacity is split across 61 geothermal plants.
- The world’s largest solar plant, the Bhadla Solar Park, has a maximum output of 2.2 GW
- The world’s largest hydroelectric plant, the Three Gorges Dam, can produce up to 22.5 GW
While geothermal plants produce less power, they have benefits over other types of renewables. For example, geothermal energy is not impacted by day-night cycles, weather conditions, or seasons.
The Big Picture
We now look at a second dataset, which shows the global contribution of each type of renewable energy. These figures are as of April 2022 and were sourced from the International Renewable Energy Agency (IRENA).
Type | Installed Capacity (% of total) | Installed Capacity (GW) |
---|---|---|
Hydro | 40% | 1226 |
Solar | 28% | 858 |
Wind | 27% | 827 |
Others (Geothermal) | 5% (0.5%) | 153 (15*) |
Total | 100% | 3064 |
*Geothermal’s total capacity in this dataset differs from the previous value of 16GW. This is due to different sources and rounding.
One reason for the slow adoption of geothermal energy is that it can only be built in regions that have suitable geological features (such as places where there is volcanic activity).
To expand on that point, consider the following data from Fitch Solutions, which shows the forecasted growth of geothermal energy capacity by region.
Fitch believes that the majority of new geothermal capacity will be installed in Asia over the next decade. On the flipside, investment in North America and Western Europe (NAWE) is expected to decrease.
Over the coming years, NAWE will experience a gradual slowdown in geothermal capacity additions as we expect that investments will be crowded out by cheaper wind and solar projects.
– Fitch Solutions
The top markets for geothermal are expected to be Indonesia, the Philippines, and New Zealand, which all lie along the Pacific Ring of Fire. The Ring of Fire is a path along the Pacific Ocean where most volcanic activity occurs.
Electrification
Where are Clean Energy Technologies Manufactured?
As the market for low-emission solutions expands, China dominates the production of clean energy technologies and their components.

Visualizing Where Clean Energy Technologies Are Manufactured
When looking at where clean energy technologies and their components are made, one thing is very clear: China dominates the industry.
The country, along with the rest of the Asia Pacific region, accounts for approximately 75% of global manufacturing capacity across seven clean energy technologies.
Based on the IEA’s 2023 Energy Technology Perspectives report, the visualization above breaks down global manufacturing capacity by region for mass-manufactured clean energy technologies, including onshore and offshore wind, solar photovoltaic (PV) systems, electric vehicles (EVs), fuel cell trucks, heat pumps, and electrolyzers.
The State of Global Manufacturing Capacity
Manufacturing capacity refers to the maximum amount of goods or products a facility can produce within a specific period. It is determined by several factors, including:
- The size of the manufacturing facility
- The number of machines or production lines available
- The skill level of the workforce
- The availability of raw materials
According to the IEA, the global manufacturing capacity for clean energy technologies may periodically exceed short-term production needs. Currently this is true especially for EV batteries, fuel cell trucks, and electrolyzers. For example, while only 900 fuel cell trucks were sold globally in 2021, the aggregate self-reported capacity by manufacturers was 14,000 trucks.
With that said, there still needs to be a significant increase in manufacturing capacity in the coming decades if demand aligns with the IEA’s 2050 net-zero emissions scenario. Such developments require investments in new equipment and technology, developing the clean energy workforce, access to raw and refined materials, and optimizing production processes to improve efficiency.
What Gives China the Advantage?
Of the above clean energy technologies and their components, China averages 65% of global manufacturing capacity. For certain components, like solar PV wafers, this percentage is as high as 96%.
Here’s a breakdown of China’s manufacturing capacity per clean energy technology.
Technology | China’s share of global manufacturing capacity, 2021 |
---|---|
Wind (Offshore) | 70% |
Wind (Onshore) | 59% |
Solar PV Systems | 85% |
Electric Vehicles | 71% |
Fuel Cell Trucks | 47% |
Heat Pumps | 39% |
Electrolyzers | 41% |
So, what gives China this advantage in the clean energy technology sector? According to the IEA report, the answer lies in a combination of factors:
- Low manufacturing costs
- A dominance in clean energy metal processing, namely cobalt, lithium, and rare earth metals
- Sustained policy support and investment
The mixture of these factors has allowed China to capture a significant share of the global market for clean technologies while driving down the cost of clean energy worldwide.
As the market for low-emission solutions expands, China’s dominance in the sector will likely continue in the coming years and have notable implications for the global energy and emission landscape.
Energy Shift
The ESG Challenges for Transition Metals
Can energy transition metals markets ramp up production to satisfy demand while meeting ever-more stringent ESG requirements?

The ESG Challenges for Transition Metals
An accelerated energy transition is needed to respond to climate change.
According to the Paris Agreement, 196 countries have already committed to limiting global warming to below 2°C, preferably 1.5°C. However, changing the energy system after over a century of burning fossil fuels comes with challenges.
In the above graphic from our sponsor Wood Mackenzie, we discuss the challenges that come with the increasing demand for transition metals.
Building Blocks of a Decarbonized World
Mined commodities like lithium, cobalt, graphite and rare earths are critical to producing electric vehicles (EVs), wind turbines, and other technologies necessary to burn fewer fossil fuels and reduce overall carbon emissions.
EVs, for example, can have up to six times more minerals than a combustion vehicle.
As a result, the extraction and refining of these metals will need to be expedited to limit the rise of global temperatures.
Here’s the outlook for different metals under Wood Mackenzie’s Accelerated Energy Transition (AET) scenario, in which the world is on course to limit the rise in global temperatures since pre-industrial times to 1.5°C by the end of this century.
Metal | Demand Outlook (%) 2025 | 2030 | 2035 | 2040 |
---|---|---|---|---|
Lithium | +260% | +520% | +780% | +940% |
Cobalt | +170% | +210% | +240% | +270% |
Graphite | +320% | +660% | +940% | +1100% |
Neodymium | +170% | +210% | +240% | +260% |
Dysprosium | +120% | +160% | +180% | +200% |
Graphite demand is expected to soar 1,100% by 2040, as demand for lithium is expected to jump 940% over this time.
A Challenge to Satisfy the Demand for Lithium
Lithium-ion batteries are indispensable for transport electrification and are also commonly used in cell phones, laptop computers, cordless power tools, and other devices.
Lithium demand in an AET scenario is estimated to reach 6.7 million tons by 2050, nine times more than 2022 levels.
In the same scenario, EV sales will double by 2030, making the demand for Li-ion batteries quadruple by 2050.
The ESG Challenge with Cobalt
Another metal in high demand is cobalt, used in rechargeable batteries in smartphones and laptops and also in lithium-ion batteries for vehicles.
Increasing production comes with significant environmental and social risks, as cobalt reserves and mine production are concentrated in regions and countries with substantial ESG problems.
Currently, 70% of mined cobalt comes from the Democratic Republic of Congo, where nearly three-quarters of the population lives in extreme poverty.
Country | 2021 Production (Tonnes) |
---|---|
🇨🇩 Democratic Republic of the Congo | 120,000 |
🇦🇺 Australia | 5,600 |
🇵🇭 Philippines | 4,500 |
🇨🇦 Canada | 4,300 |
🇵🇬 Papua New Guinea | 3,000 |
🇲🇬 Madagascar | 2,500 |
🇲🇦 Morocco | 2,300 |
🇨🇳 China | 2,200 |
🇨🇺 Cuba | 2,200 |
🇷🇺 Russia | 2,200 |
🇮🇩 Indonesia | 2,100 |
🇺🇸 U.S. | 700 |
Around one-fifth of cobalt mined in the DRC comes from small-scale artisanal mines, many of which rely on child labor.
Considering other obstacles like rising costs due to reserve depletion and surging resource nationalism, a shortfall in the cobalt market can emerge as early as 2024, according to Wood Mackenzie. Battery recycling, if fully utilised, can ease the upcoming supply shortage, but it cannot fill the entire gap.
Rare Earths: Winners and Losers
Rare earths are used in EVs and wind turbines but also in petroleum refining and gas vehicles. Therefore, an accelerated energy transition presents a mixed bag.
Using permanent magnets in applications like electric motors, sensors, and magnetic recording and storage media is expected to boost demand for materials like neodymium (Nd) and praseodymium (Pr) oxide.
On the contrary, as the world shifts from gas vehicles to EVs, declining demand from catalytic converters in fossil fuel-powered vehicles will impact lanthanum (La) and cerium (Ce).
Taking all into consideration, the demand for rare earths in an accelerated energy transition is forecasted to increase by 233% between 2020 and 2050. In this scenario, existing producers would be impacted by a short- to medium-term supply deficit.
The ESG dilemma
There is a clear dilemma for energy transition metals in an era of unprecedented demand. Can vital energy transition metals markets ramp up production fast enough to satisfy demand, while also revolutionising supply chains to meet ever-more stringent ESG requirements?
Understanding the challenges and how to capitalise on this investment opportunity has become more important than ever.
Sign up to Wood Mackenzie’s Inside Track to learn more about the impact of an accelerated energy transition on mining and metals.
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