OTEC Closed-Cycle Systems Cost Evaluation

Abstract

Innovative technologies such as OTEC achieve commercial development when potential investors decide that the return on the investment will repay the estimated development costs plus a profit, with an acceptably low risk of cost overruns. Industrial experience shows that the estimated cost to complete development of a new technology generally increases as development proceeds from the conceptual design through pilot development, demonstration, field testing, and final commercial manufacture (Merrow et al., 1981). The ratio between final cost and initial design estimate is strongly dependent on the extent to which the manufacturing process employs already developed equipment, procedures, and facilities. New projects that require “high technology” for their success, such as jet engines or nuclear power plants, have been characterized by large underestimates of the final costs, whereas the costs of projects that are firmly based on existing technology, such as the development of “supertankers,” have been accomplished well within the usual industrial uncertainty margin of ± 15 to 20%. The accuracy of the estimate is also strongly dependent on the thoroughness of the systems engineering evaluation that is done before development proceeds. Commercial applications of OTEC have been proposed in three principal categories. The first includes OTEC power plants mounted on floating platforms that would generate 50- to 400 MWe (net) of onboard electric power. The need to minimize plant size makes it mandatory to use closed-cycle OTEC for these applications. The second category includes land-based or shelf-mounted plants designed to supply power in the 50- to 400-MWe range to municipal utilities. Either open- or closed-cycle systems could be suitable. The third category comprises small (5- to 20-MWe) land-based or shelf-mounted OTEC plants designed for island applications where electric power generation, mariculture, fresh-water production, supply of cold water for air-conditioning systems, and fuel production could be combined to offer an economically attractive OTEC system despite the relatively high cost of power for small OTEC installations. Open-cycle OTEC plants may be the preferred choice for the third category. The estimated investment costs of installed complete OTEC systems, measured in dollars per kilowatt of net OTEC electric power generated, differ significantly among the three categories.