Ever heard of ocean thermal energy? This Australian startup wants to take it from prototype to product

An Australian startup is hoping to sail past the debris of failed ocean thermal energy pilots and shuttered attempts, and says a deal with Korean researchers could turn the very unknown ocean energy technology into reality.

Deep Sea Energy wants to build the first commercial ocean thermal energy conversion (OTEC) project in the world, possibly in Australia but more likely — if they can cross the myriad hurdles involved in getting a new technology from prototype to commercial — in Malaysia.

Co-founder Ivan Chua admits it’s a hard sell in Australia, but part of his job is to build the business case to make investors also believe in the dream.

“When you meet with government stakeholders, many of them don’t actually know about it. So a big part of what we’re doing in Australia at the moment is raising awareness,” he told Renew Economy.

“The reason we believe in this potential is because of the test results from that Korean test. That provides some early evidence that ocean energy can be feasible.”

The Korean test project was a 1 megawatt (MW) offshore demonstration of a floating design dubbed the K-OTEC1000 by the Korean Research Institute of Ships and Ocean Engineering (KRISO), which Deep Sea Energy plans to commercialise. 

Commercialisation means scaling that 1 MW up to 100 MW.

Chua says the test showed the prototype, designed for Kiribati’s South Tarawa island, could work with a temperature difference as low as 20ºC. 

The trick will be getting the cost down.

A study from this year found the levelised cost of electricity (LCOE — the price once all other costs are factored in) for OTEC is anywhere between $US145 ($US222) megawatt hour (MWh) to $US630/MWh.

UK-based Global OTEC thinks it can get that down to $US180/MWh by using off-the-shelf platforms and components for a first-generation 1.5MW offshore system platform, over 25 years and with a 50 per cent subsidy to build it.

One study last year suggested that costs could come down as low as $US30/MWh if governments contract and own the project.

1880s tech

The OTEC concept was first proposed in 1881 and is an engineer’s dream: it works by using the temperature difference between cold deep sea water and warmer shallows to run a turbine. 

There are two main ways to do this. 

A closed system is much like solar thermal, but instead of heating a liquid with a high building point using the sun’s rays, it uses one with a low building point such as ammonia so it can be vaporised by warm water. That vapour drives a turbine and cold water from the deep is pumped up to condense the vapour back into a liquid. 

An open system uses seawater which is pressurised to make steam, and again condensed with colder water. 

The Makai Ocean Engineering demonstration for off the coast of Hawaii. Image: Makai Ocean Engineering.

Chua says the KRISO technology is now at the stage where they know it can function in the wild, and now it needs a business model to prove it can be done at a price electricity buyers will pay. 

“Let’s say you do it in the middle of the ocean, what’s the business case there, who is going to buy your electricity,” he says.

“How you configure it for deployment might be different [in each location] as it depends on the terrain. Is it going to be onshore or offshore? If offshore, is it rough or is it relatively calm?”

Since Deep Sea Energy formed in August last year, it has already investigated and tossed out New South Wales (NSW) as a general location – the water temperature difference falls below the minimum 20ºC required by the KRISO tech – and they’re now looking further north at Queensland and Western Australia, with a focus on both co-locating near population centres and providing low cost electricity for green hydrogen production. 

Chua is well aware of green hydrogen’s current travails, to the point where he almost repeated arguments put forward in Renew Economy this week for the industry’s difficulties. 

“The reason green hydrogen has taken a step back is because of the realisation that the feed-in electricity cost, the LCEO [levelised cost of electricity] is incredibly important,” he says.

“With OTEC it’s still unproven, but at scale we believe it can provide cheap LCOE. If that can be validated and proven, then green hydrogen is much closer than we expect.”

Challenges abound

The journey that Deep Sea Energy has in front of it is a tough one, given how many much-hyped technologies that are heavy on engineering challenges have come before theirs. 

One of the specific challenges that OTEC brings is the riser, the 1km long pipe which transports cold water to the surface. While the technology can borrow from offshore oil and gas in some areas, Chua says the riser isn’t comparable. 

Furthermore, it’s even more niche than wave energy, which has had its share of trials as companies have tried and failed to fit the idea into Australia’s energy and business models. The technology generally was given a lifeline by a generous EU grants program. 

And much like solar thermal, boffins are still trying to make OTEC work at a scale that is useful. 

In terms of what has been done, Makai Ocean Engineering launched a 105 kilowatt (kW) demonstration in 2015 in Hawaii. The company itself says that 100MW has long been thought to be the smallest possible design to reach the kinds of economies of scale needed to make it commercially viable. It’s not clear if this project is still operating. 

The 100kW Okinawa OTEC pilot off the island of Kumejima is the only consistently operating generator in the world. This project is an onshore design and uses seawater.

Alongside these functioning facilities are a swathe of splashy announcements, such as Lockheed Martin’s deal in 2013 to build a 100MW project near Hainan Island in China.

The project was the arms dealer’s next step from the Hawaii project with Makai Ocean Engineering, but appears not to have made it further than a press release. 

And yet with improved heat exchange technology and countries such as Korea and Japan desperate for alternate sources of electricity, OTEC is making a comeback. 

As well as Deep Sea Energy, a UK company called Global OTEC is currently scouting for a location to test a 500kW onshore pilot using its own design.

Chua and his cofounders, like many backers of energy technologies heavier in potential than runs on the board, are trying something at a time when uncertainty is the only certainty in global energy. 

While onshore wind, solar and lithium ion batteries are in the lead, the ultimate replacement for coal- and gas-fired power is still up in the air. Meaning that if there’s any time to test out a new technology and see if it can find a place in a future energy system, now is that time.