Numerous comments were posted on this blog in response to my two previous postings here regarding ocean thermal energy. Those comments raised various issues and concerns regarding the implementation of ocean thermal energy technology. This posting is an effort to provide some perspective on the status of ocean thermal technology, written with the intention of addressing the points people raised in their comments.

The postings by viewers tended to fall into several categories, which I shall group as follows:

Since being assigned by NSF in 1973 to serve as the first ocean thermal program manager, charged with organizing and conducting a concerted federal R&D program on ocean thermal energy, my tentative outlook has been, and continues to be, that of a cautiously optimistic advocate of this technology. Informed by my experience since then, I have yet to encounter a demonstrable or foreseeable “show-stopper” in the technical, environmental, or economic areas that would preclude the achievement of economically/technically viable and environmentally acceptable technology for harnessing ocean thermal energy.

In the mid-1970s my outlook was first bolstered by two federally sponsored industrial studies that resulted from contracts awarded to Lockheed and TRW. After conducting an engineering evaluation, both firms independently concluded that ocean thermal technology had good prospects for achieving technical and economic viability. By “economic viability” I believe that we all mean that baseload ocean thermal power systems could become cost-competitive, at least versus oil-derived electricity.

Now, some 35 years later, both Lockheed Martin (LM) and the U.S. Navy seem to have reached similar tentative conclusions about today’s outlook for this technology.

Recently the Naval Facilities Engineering Command (NAVFAC), which is responsible for naval-base infrastructure, competitively awarded an $8.1 M contract to the LM team. That award is for technical activities aimed at reducing overall system and developmental risks for critical subsystems and components, and at maturing a pilot-plant design. The Navy has a long-term interest in helping foster the commercialization of ocean thermal technology, achievement of which would enable it to purchase, at cost-effective rates, ocean-thermal-derived electricity and fresh water from privately developed facilities at U.S. military bases located in places like Hawaii, Guam, and Diego García.

Cost and Market-entry Outlooks

The largest ocean thermal power system heretofore operated (by DOE contractors in 1980) was OTEC-1, a floating test facility designed to test candidate ocean thermal components and subsystems, such as heat exchangers, rated at 1 MWe. Lacking a turbine-generator set, that facility fell short of being a complete power system. Two complete closed-cycle ocean thermal power systems of sub-megawatt size have been successfully demonstrated. They were the 50 KWe (15 kWe net power) floating facility operated off Hawaii in 1979, which was developed by a private consortium led by Lockheed, and the 100 kWe (34 kWe net power) land-based facility operated in 1981 on the island of Nauru, which was developed by the Tokyo Electric Power Services Co.

To bridge the gap to multi-megawatt commercial plants, the LM team is designing a 5/10 MWe ocean thermal pilot plant—initially containing the first of two 5 MWe power modules—to be sited off Pearl Harbor, Hawaii. Operation of the pilot plant will provide performance, cost, and environmental data preparatory to designing and constructing a 100 MWe “commercial” plant for Hawaii’s oil-driven market.

Extrapolating pilot-plant cost estimates to what the commercial plant might cost, the LM team believes that a first-of-a-kind 100 MWe commercial plant can be built at a capital cost enabling it to compete in Hawaii’s oil-driven electricity market; i.e., to produce electricity at an avoided-cost target close to what busbar electricity is currently worth there.

Assuming that LM can achieve that energy-cost target—a busbar cost of electrical energy of roughly 20¢/kWh—then, if I work backward from that energy cost, using reasonable assumptions regarding interest rate and plant-amortization lifetime, including an additional cost of ca. 2¢/kWh for O&M, I estimate that that energy cost for a first-of-a-kind 100 MWe baseload power plant would roughly correspond to a plant capital cost target of about $1 B, or $10 per watt. If one assumes that federal tax credits are available to serve as an incentive/subsidy, then the tolerable capital cost for this first-of-a-kind commercial power plant could perhaps be about 50% higher, around $1.5 B.

In contrast, the 5/10 MWe pilot plant that LM is designing—since piloting of a technology at small scale increases the cost per unit output—will probably cost roughly several hundred million dollars, corresponding to an energy cost perhaps ranging from 40 to 60¢/kWh, making that large an investment sub-economic. Hence the pilot plant will require some subsidization, the hurdle-cost for launching this new ocean industry.

But the subsidy required sounds like peanuts nowadays. Note that during its heyday—the late 70s and early 80s—the DOE ocean thermal R&D program was being funded at about $40 M annually, equivalent to $100 M/year in today’s dollars. It may well be that Recovery Act funds or DoD will provide that subsidy, but it would be reassuring if the Obama Administration and the Congress would soon explicitly embrace ocean thermal and commit to rapidly advancing it into the marketplace, as was happening during the Nixon, Ford, and Carter Administrations.

Once the pilot plant is successfully operated, the design data and cost estimates for the first 100 MWe commercial plant will become much clearer. There are various options for funding that commercial plant. For example, about 80% of its capital investment could be federally loan-guaranteed; the remainder, roughly $200 to 300 M or so, would be venture capital, and investment tax credits would offer an additional incentive.

A comparison—albeit crude—can be made between the above $10 capital cost per watt, for baseload (continuous, 24/7) ocean thermal power capacity, versus the capital costs per watt for intermittent wind and photovoltaic power. Let’s assume wind and photovoltaic power systems that cost $4 and $7 per watt, respectively, and that they generate power about one-third of the time. Then, for purposes of making a rough comparison with the capital cost of a baseload source like ocean thermal, the intermittent wind and photovoltaic capital costs can be multiplied by three, yielding $12 and $21 per watt, respectively, compared to roughly $10 to $15/watt for a first-of-a-kind, 24/7 ocean thermal plant.

References

Clare, R., 1981, in Proceedings, Eighth Ocean Energy Conference (ed. E.M. MacCutcheon)

Derrington, J., 1979, in Proceedings, Sixth Ocean Energy Conference (ed. G.L. Dugger)

Gavin, A. P. & T. M. Kuzay, 1981, 0TEC-1 power system test program: biofouling and corrosion monitoring on 0TEC-1. Argonne National Laboratory

Green, H.J. and P.R. Guenther, 1990, Carbon dioxide release from OTEC cycles, Solar Energy Research Institute report TP-253-3594