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Solvency Incentives Solve
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- OTEC isn’t being invested in now because of high startup costs
- Funding key to solve—the financial sector is ready
SolvencyIncentives SolveIncentives are key to spur private sector investment of OTECUS Department of Energy 5 [“Ocean Thermal Energy Conversion,” 9/12/05, http://www.eere.energy.gov/consumer/renewable_energy/ocean/index.cfm/mytopic=50010] In general, careful site selection is the key to keeping the environmental impacts of OTEC to a minimum. OTEC experts believe that appropriate spacing of plants throughout the tropical oceans can nearly eliminate any potential negative impacts of OTEC processes on ocean temperatures and on marine life. OTEC power plants require substantial capital investment upfront. OTEC researchers believe private sector firms probably will be unwilling to make the enormous initial investment required to build large-scale plants until the price of fossil fuels increases dramatically or until national governments provide financial incentives. Another factor hindering the commercialization of OTEC is that there are only a few hundred land-based sites in the tropics where deep-ocean water is close enough to shore to make OTEC plants feasible. OTEC isn’t being invested in now because of high startup costsDaniel 2k [Thomas H. Daniel, Ph.D, The Natural energy Laboratory of Hawaii Authority, 1/2000, “Ocean Thermal Energy Conversion (OTEC)” UN Atlas of the Oceans”] OTEC has tremendous potential to supply the world’s energy . This potential is estimated to be about 1013 watts of baseload power generation [20]. However, OTEC systems must overcome the significant hurdle of high initial capital costs for construction and the perception of significant risk compared to conventional fossil fuel plants. These obstacles can be overcome only by progressing beyond the present experimental testing and evaluation of small-scale demonstration plants to the construction of pilot-sized and, eventually, commerical-sized plants to demonstrate economic feasibility. As a UN Development Program study determined, the confidence to build commercial-sized OTEC plants will not develop until investors have the demonstration of a 5-megawatt pilot plant operating for 5 years. This demonstration will require a significant investment with little potential near-term return. For the near-term future development of OTEC systems, isolated niche markets with high conventional energy costs and a need for energy independence may provide a viable venue for market penetration in the size range of 1 MW to 15 MW. These may provide the demonstration required for penetration into larger markets where economically competitive plants of 50 - 400 MW will be viable Funding key to solve—the financial sector is readyWorld Energy Council 8 [World Energy Council, Don Lennard “Survey of Energy Resources 2007: The Way Ahead and the Market” 2008, http://www.worldenergy.org/publications/survey_of_energy_resources_2007/ocean_thermal_energy_conversion/771.asp] As with most new technologies, the financial sector is slow to involve itself until one or more representative demonstration plants have operated successfully - and this has proved to be true in the past for OTEC technology. However, with the progressive reduction in risks - for example the mooring of a floating OTEC plant will now be an application of 'routine' offshore oil and gas experience - a number of more enlightened financial bodies are now prepared to become involved at this relatively early stage of development. Other funding sources would include agencies such as the World Bank or European Development Bank and a further potential source of funding is possible through the Lomé and Cotonou Agreements between the European Union and the Africa-Caribbean-Pacific (ACP) States, many of which are prime candidates to use OTEC power. In Europe both the European Commission and the industrially-based Maritime Industries Forum examined OTEC opportunities with relevance to DOWA in general rather than just OTEC, and the UK published its Foresight document for the marine sector, looking five to twenty years ahead, and both OTEC and DOWA were included in the energy section of the paper. It is significant that the emphasis in the recommendations from all three European groupings has, again, been on the funding and construction of a plant in the 5-10 MW range. Current US activity is concentrating on an Indian Ocean island site, and it is perhaps noteworthy that both Japanese and British evaluations continue to identify Fijian prime sites, one each on the two largest islands of that country. The worldwide market for all renewables has been estimated for the timescales from 1990 to 2020 and 2050, with three scenarios and, not surprisingly, all show significant growth. Within those total renewable figures, opportunities exist for the construction of a significant amount of OTEC capacity, even though OTEC may account for only a small percentage of total global electricity generating capacity for some years. Estimates have been made by French, Japanese, British and American workers in the field, suggesting worldwide installed power for up to a thousand OTEC plants by the year 2010, of which 50% would be no larger than 10 MW, and less than 10% would be of 100 MW size. On longer timescales, the demand for OTEC in the Asia/Pacific region has been estimated at 20 GW in 2020 and 100 GW in 2050 (OECD, 1999). It has to be said that some of these numbers seem optimistic, with realisation depending on the successful operation of a number of demonstrator plants at an early date. In summary, however, it can realistically be claimed that the economic commercialisation of OTEC/DOWA is 'now' - nearly all the technology is established, and the greatest concentration of effort seems logically to be aimed at lining up an increased range of suitable funding sources. 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