In considering the economics of OTEC, it is appropriate to determine if multiple-product systems, e.g., electricity, desalinated water, mariculture, and air conditioning (AC) systems yield higher value by, for example, decreasing the equivalent cost of electricity.  Because mariculture operations, as in the case of AC systems, can only use a relatively minute amount of the seawater required for the thermal plants they should be evaluated independent of OTEC.  For example, the cold water available from a 1 MW OTEC plant could be used for daily exchanges of twenty-five 100 m x 100 m x 1 m mariculture ponds, requiring more than 25 Ha of land. Therefore, it is recommended that OTEC be considered for its potential impact in the production of electricity and desalinated water and that mariculture and AC systems, based in the use of deep ocean water, be considered decoupled from OTEC.

OTEC is capital-intensive (see Figure 5), and the very first plants will most probably be small requiring a substantial capital investment. Given the relatively low cost of crude oil, and of fossil fuels in general, the development of OTEC technologies is likely to be promoted by government agencies rather than by private industry.  The motivation of governments in subsidizing OTEC may vary greatly, from foreign aid to domestic concerns.  For the former case, ideal recipient countries are likely to be independent developing nations.  If their economic standing is too low, however, the installation of an OTEC plant, rather than direct aid in the form of money and goods, may be perceived as inadequate help.  In addition, political instability could jeopardize the good will of helping nations to invest.  For the latter case, potential sites belong to, or fall within the jurisdiction of, developed countries. 

Comparing production costs of electricity and desalinated water can identify scenarios under which OTEC should be economical, relative to conventional technologies. Table 1 summarizes results obtained for the capital costs given in Figure 5 using a fixed rate of 10 percent, 20 year loan, and OTEC plant availability of only 80 percent.  Operation and maintenance costs corresponding to approximately 1.5 percent of the capital cost are used.  One scenario corresponds to small island nations, where the


cost of diesel-generated electricity and fresh water is such that a small, 1 MW land-based OC- OTEC plant, with water production, would be cost-effective today.  However, only a few sites throughout the world meet this scenario.  A second scenario corresponds to conditions that are plausible in several island nations where 10 MW land-based OC-OTEC plants could produce cost competitive electricity and desalinated water. One can envision these small plants deployed in, for example, Pacific islands such that 20 years from now a total of 100 to 300 MW would be installed.  A third scenario corresponds to land-based hybrid OTEC plants for the industrialized nations' market producing electricity through an ammonia cycle and desalinated water through a flash (vacuum) evaporator.  This scenario would be cost-effective in industrialized island nations with a doubling of the cost of oil fuel or with a doubling of water costs, and for plants rated at 50 MW or larger.  The fourth scenario is for floating OTEC electrical plants, rated at 100 MW or larger, and housing a factory or transmitting electricity to shore via a submarine power cable.  These plants could be deployed throughout the EEZ of numerous nations and could encompass a significant market.  Estimates of their capital costs and resulting costs of electricity are given in Table 2.

Nominal Size, MW	TYPE	Scenario	Potential Sites
1	Land-Based OC-OTEC with 2nd Stage for Additional Water Production.	Diesel: $45/barrel   Water: $1.6/m3	Present Situation in Some Small Island States.
10	Same as Above.	Fuel Oil: $30/barrel Water: $0.9/ m3	U.S. Pacific Insular Areas and other Island Nations.
50	Land-Based Hybrid CC-OTEC with 2nd Stage.	Fuel Oil: $50/barrel Water: $0.4/ m3 Or Fuel Oil: $30/barrel Water: $0.8/ m3	Hawaii, Puerto Rico If fuel or water cost doubles.
50	Land-Based CC-OTEC	Fuel Oil: $40/barrel	Same as Above.
100	CC-OTEC Plantship	Fuel Oil: $20/barrel	Numerous sites

Table 1. OTEC Potential Sites as a function of Fuel and Water Costs.

Offshore Distance, km	Capital Cost, $/kW	COE, $/kWh
10	4200	0.07
50	5000	0.08
100	6000	0.10
200	8100	0.13
300	10 200	0.17
400	12 300	0.22