Abstract
Ocean Thermal Energy Conversion (OTEC) is a renewable ocean energy that relies on naturallyoccurring temperature gradients in the ocean. Due to the vast resource availability provided by the ocean, it has captured the minds of scientists, academics, and entrepreneurs since Jules Verne’s 20,000 Leagues Under the Sea inspired initial research in the 1800s. Still, like many technologies when compared to the status quo, the early-stage economics of OTEC can be a challenge. This report refrains from technical details on OTEC, technical information previously published by Dr. Vega and his colleagues is available online, rather we will explore the current costs of OTEC and in what cases it may be economically applied today.
This updated assessment provides: (i) Capital Costs ($/kWnet) estimates from equipment and installation quotes meeting specifications developed by Dr. Vega and confirmed with the operation of experimental plants; and (ii)Updated Levelized Cost of Electricity ($/kWh) as function of loan rates; including desalinated water production credit for specific open cycle OTEC cases. Where possible new quotations were solicited to update cost figures. As further reference, information from Japan is provided where applicable.
Dr. Vega determined that the major differences in capital cost between new and historic data are due to:
- The marked decrease over the last 25 years in fabrication cost ($/tonnage) of ship shaped vessels indicates that it is reasonable to expect that the cost of OTEC ship shaped vessels will be about 35% lower than the extrapolated estimate.
- High-Density-Polyethylene-Pipes (HDPE) pipes are currently available in larger diameters of appropriate thickness (3m inner diameter) such that they can be used as the cold-water pipe for a 5 MW plant and in bundles for the 10 MW (2 pipes) and the 50 MW (8 pipes) resulting in relatively lower costs.
Levelized Cost of Electricity (LCOE) was estimated using the updated or extrapolated capital costs as detailed in Appendix 1. Depending on the design, manufacturers, location, inflation, and interest rates imposed there is significant variability.
Considering sites with average seawater temperature differential (ΔT) of 21.5 ºC, updated Levelized Cost of Energies ($/kWh) for first-generation, plants were calculated and compared with other sources. In the case of a 10MW closed cycle plantship based on off-the-shelf parts, the new LCOE is between $0.37/kWh and $0.46/kWh when concessionary loans are available. Japan data updated to 2022 dollars expect a semi-submersible platform to cost $0.30/kWh under the same loan conditions. These decrease with scale. For open cycle plantships, even with credit for desalinated water, a higher LCOE of $0.62/kWh was calculated.
As expected with most developing technologies, these first-generation LCOEs are challenging without environmental credits or subsidies. Studies in Japan, such as the New Energy and Industrial Technology Development Organization of Japan (NEDO)’s 2014 report “Research and Development of Nextgeneration Ocean Energy Power Generation Technology (Ocean Thermal Energy Conversion) cited on page II3-3 of the final report[Okinawa Prefectural Government, 2019] have shown an expected decrease in onshore facility capital cost of 18% for subsequent commercial facilities, and a reduction in capital cost of 30% for offshore OTEC as structures are optimized. This equates to a $0.26/kWh LCOE for a 50 MW plantship when concessionary loans are applied.
Sites with higher ΔT will yield net output increases such that locations with a ΔT of 24.5 ºC will yield about 40% higher output. This would have a corresponding effect such that the LCOE would be about 30% lower. This equates to a $0.19/kWh LCOE for the commercial 50 MW plantship noted above in warmer waters. This presents a laudable goal in terms of future OTEC implementation, however, currently there are no MW-scale plants in operation. To achieve larger scales, smaller plants with lower economies of scale will be required first.
Given the high cost for first-generation implementation, what scenarios could make sense to support implementation of renewable energy and scale OTEC deployment? Analysis shows that it is possible to provide a business case for OTEC at small-scale under certain special situations. In such cases it may still be possible to yield an LCOE below $0.20/kWh.
As a recent offshore approach, the UK-based Global OTEC calculates that use of alternative platforms and components could achieve LCOE of $0.18/kWh for first-generation 1.5MW offshore OTEC platform with 50% subsidy and 25-year term. Onshore, multiple use of seawater in industry can provide additional economic and social benefits that de-risk the required seawater intake infrastructure investments.
Localizing for improved performance with demonstration to facilitate risk reduction and cost reduction can accelerate OTEC deployment. In addition, factors for which it is difficult to apply economic benefits are not included in this analysis, though they may provide value beyond environmental and monetary benefit. These include OTEC’s ability to provide high capacity factors, suitable for baseload power, as well as reactive power for grid stabilization.
This study shows that in terms of economics, OTEC is ready for deployment in certain markets, and with further deployment can be competitive at larger scales.