Missions And Commercial Opportunities, Ocean Thermal Energy Conversion (OTEC)
Authors: Francis Evans J. , Dugger Gordon L. 
Published: October 2008

The national Ocean Thermal Energy Conversion (OTEC) program has entered the hardware stage and is directed on two parallel development paths: OTEC plants for direct transmission of electricity to U.S. utility grids from offshore sites, and OTEC industrial plant-ships for the onboard production of energy intensive products such as ammonia, hydrogen (possibly transported as ammonia), aluminum, and other metals and chemicals. The industrial plant-ship path has been the major subject of the OTEC work by the Applied Physics Laboratory of The Johns Hopkins University. The onboard production of ammonia appears particularly attractive for two reasons:there is a growing market for fertilizers and chemicals based on ammonia, which is now made from natural gas andammonia is a hydrogen carrier-it can be used for generation of electricity via hydrogen-oxygen fuel cells anywhere in the U.S. Estimates of ammonia production cost in the mid-1980s-about $l00/short ton (1975 dollars) on tropical "grazing" plant-ships and the possible cash flow picture for sales for the fertilizer/chemical market at various sales prices ($300-$142) indicate that the plant investment can be recovered in 3.2 to 6.3 years.

Thus, the potential for early profitability is good. Two possible types of venture organizations underpinned by "take-or-pay" contracts for the ammonia product are described-an outright ownership type and a leveraged lease arrangement. By 1990 it may be possible to achieve electricity costs of 28-33 mills/kWh (1975 dollars) by the OTEC/ammonia/H2-O2 fuel cell route, competitive with other baseload power sources.

INTRODUCTION

Significant increases in energy prices can adversely affect the overall standard of living in the United States and the already large deficits in our balance of payments. Among the major energy-resource alternatives to oil and natural gas, coal and nuclear power have environmental problems and costs that will continue to escalate, whereas Ocean Thermal Energy Conversion (OTEC) offers the greatest promise among the newly developing solar energy technologies for providing large amounts of energy with minimal environmental impact and potentially lowest cost.

For these reasons, OTEC has been described by some as the "hottest" prospect in solar energy technology. From a small effort in 1973, it has grown to a program with funding of more than $35 million in 1978 and two parallel development paths: OTEC/direct transmission to supply electricity by cable directly to a utility grid from an off-shore U.S. site; and OTEC/industrial plant-ships to produce energy-intensive products such as ammonia, hydrogen (possibly transported as ammonia), aluminum and other metals in process plants onboard OTEC ships at sea. Research and development work on both paths has entered the hardware stage, and the options can now be assessed with greater confidence. In our opinion, implementation of the tropical ocean grazing option is less difficult and lower risk because it does not require technical solutions for mooring in water 3000 ft or greater depth or an electric riser cable to shore.