INVESTMENT


Do we know how much OTEC is going to cost and whether it will work?

NEW-OTEC is so promising, it could replace oil and gas as the main source of mankind's energy.

Why use OTEC?

• OTEC is a proven technology, and it uses “off the shelf” equipment.
• OTEC has a 90% capacity factor and no fuel cost.
• OTEC comprises some of the most common technologies in the world.
• Hoses, pumps, turbines, alternators, inverters, and heat exchangers are the main elements of a “NEW OTEC” system; those are all traditional, mainstream, and mass-produced technologies.

We know OTEC parts are small and cheap.  Most importantly they are ready for mass production.

Thus we can make a significant contribution to the widespread use of fossil fuels without breaking the banks or relying on intermittent sources of energy such as wind and solar.

THE GREATEST BUSINESS OPPORTUNITY OF THE 21st CENTURY

OTEC has many strong points: capacity factor, resource size, and part size are among the most important. That the OTEC power unit can be bought off the shelf is of extreme relevance; the absence of this factor is what has made the progress of solar PV and wind power so slow. Just one alternator company can produce 15+ GW of alternators per year, which could be ordered tomorrow. In recent years, approximately 60 GW of increased wind power operating capacity was achieved in one year, after 20 or so years of growth.

Capacity factor is so extremely valuable, and it cannot be summed up better than by the table below. Note that all it would take for many green technologies to be cheaper than fossil fuel would be a higher capacity factor.

Finding a resource large enough to compete with fossil fuels is not easy. Other types of green energy are not large enough in resource, or are too large in part size and space requirement to provide sufficient power quickly enough. OTEC could be different, but innovation is required. This is something which Breakthrough Ventures, headed by Bill Gates and many other notable billionaires — including Richard Branson and Mark Zuckerberg — have recognized. They are interested in OTEC, and Bill Gates himself has proposed that green energy will, through innovation, be cheaper than fossil fuels.

www.b-t.energy/coalition

COST OF THE NEW OTEC SYSTEM

The delight of NEW OTEC lies in its similarity to oil and gas power generation; the parts are the same, which means the cost of the OTEC power generation element is readily ascertained, setting it apart from other “new” technologies.

There are working OTEC systems around the world; OTEC is ready for “mass production.” In fact, all the parts are already mass produced. So do they work? Of course they do, and we know how much they cost!

Forget about long-winded prototype development and R+D; OTEC technology is “off the shelf” and ready to go. Our OTEC systems are available for sale. Such is the nature of the industry, rather than our company.

Is there any way to valuate the OTEC market?

Apparently the OTEC resource is at least 7–14 terawatts in size (Nihous). At one kW per person, the population of the entire world would require 7.4 terawatts. If the cost was set at $137 per MW/hr, which is at least half the price of the present energy price in the Caribbean, 14 terawatts would be worth $112 trillion.
Valuation of energy companies is easy. One accepted method for valuing a company is to multiply gross annual profit by 8 for wholesale, and by 6 for retail. $137 per MW/hr roughly equals $1 million per annum, at 90 % operation per annum. Each OTEC wholesale MW may be worth approximately $8 million. If $1 million retail profit per MW is made, the company is worth $6 million per MW sold.

Energy prices are high, so it is relatively easy to compete with a high capacity factor; $137 per MW/hr is less than the levels of offshore wind. Have a look at the table below — it’s fascinating. The levelled cost is the price that must be charged for a plant to break even over its entire lifetime. You will see how useful it is for oil and gas that part production is already invested in, and how important it is to have a high capacity factor. You may also notice that geothermal is the cheapest source of energy, even though high-tech drilling is required. We argue that this is for three reasons:

  1. No fuel cost.
  2. The pre-existing nature of the power production equipment, like heat exchangers, generators, and so on.
  3. Capacity factor.

Interestingly the capital cost (levelled) of some “oil and gas” is as little as $15 per MW/hr. Therefore, the power production equipment — heat exchangers, alternators, and so on — of geothermal and OTEC should lie somewhere within that $15 per MW/hr. Per our research, it does do; besides the power production equipment, OTEC only requires a pipe, which is also not expensive.

Unfortunately for oil and gas (but not OTEC and geothermal), the fuel cost must be taken into consideration, which ranges from $29–94 per MW/hr. The problems for OTEC and geothermal lie in how the hot or cold medium is delivered to the power production equipment. If we look at the table, we can see that geothermal is more expensive than the $15 per MW/hr quoted.

Remarkably, the levelled capital cost of combined cycle and geothermal is less than the recurring fuel cost of many dirty fuel technologies, and therefore OTEC’s should be too.

Could OTEC be the next big thing?

The OTEC market is untouched — like the internet in the 90s — and should, therefore, be of interest to investors. It is also a similar, if not greater, opportunity: it could hold 110,000 billion $ companies, assuming they all charged $137 per MW/hr and operated for 90% of each day. With rock bottom prices of $45 per MW/hr, 30,000 billion $ companies could be possible. Add that we are a first mover, and investors would surely assume that for at least the first handful of revenue generating OTEC companies, a high-value future is possible — and that’s without even scratching the surface.

There is a greater demand for clean energy and energy independence than there ever was for the internet, the value of which was doubted for ages.

OTEC is also suitable for the many Caribbean and Pacific Islands where prices are as high as $500 per MW/hr (forty pence per kW/hr), which is ten times greater than U.S. wholesale energy prices. OTEC has the potential to transform these economies into world-leading ones with 100% green energy and affordable prices. We intend to offer leases, which could see islands saving up to 75% within one year of purchase.
Utilities in the Caribbean are not popular; OTEC could change this, and do so in a way that sees the utility making more money, not less. This saving/profit can be reinvested, and OTEC can grow organically within a country. The saving can then be passed onto the customer, transforming the quality of life in many cases, and turning villains into heroes in some cases.

IS OTEC low cost?

The cost of OTEC must be split into many different parts. As we said previously, the power production is certainly very low cost. Other elements affect the value — rather like geothermal, which more expensive in capital cost than combined cycle. This must be because of the drilling. OTEC has a similar problem, which is the cost of the water delivery.

Per our research, there is no part — including all the major ones — that costs more than the reasonable annual revenue an OTEC system would generate. Even the sum of the parts is less than a reasonable annual income. There is no issue with part cost, unlike with the cost and transport of large wind turbine blades, for example.

CONDITIONS FOR OTEC PROFITABILITY


Due to the high price of renewables and the relatively low cost of oil and gas, and what with the fact that oil and gas sources are actually likely to be more expensive than OTEC, as long as the cold water required by OTEC can be delivered for a reasonable cost, “NEW OTEC” is well placed to make massive profits. This is because low prices could be charged but, due to the high cost of renewables, higher prices can be charged whilst offering a better solution than present sources of renewable energy.

If you think about what must be done to extract the oil and gas from the earth, the distances traveled, and the processes that must be carried out, it is surely of no surprise at all that a shell and tube heat exchanger, a pair of hoses, and a power generation unit would cost less.

Traditionally, the cost issue for OTEC lies in the cold water delivery. This is especially so offshore, where floating offshore platforms are required, making it impossible for small-scale OTEC to be cost effective.

Offshore platforms make up 50% of even very large OTEC systems. OTEC platforms are unproven, and investors are skeptical.

Pumping water onto land or a platform takes energy. At least 20% of the energy produced is typically used to bring the required water to shore.

If plants that each produce 100 MW are needed, or even plants that each produce 10 MW, then capital must be risked. Can there be a simple, low-cost demonstration to comfort investors? To date, this step has not occurred with any evidence that the installation is cost effective.

An OTEC system is traditionally not cost effective at all on a small scale, which has slowed development. The use of a fixed pipe has been associated with OTEC for many years. The pipes must be wide (adding to the cost) or else the deep seawater rushes up too fast, creating too much friction, which takes electrical power from the system. This is called parasitic energy consumption, and it can make an OTEC system absurd unless large pipes are used. Also, small pipes do not insulate the cold water well enough; in some cases the cold water is warmed before it reaches the surface.

Even 30 cm pipes, which are large enough to not warm up, cost too much to install.  Per research, 30 cm pipes cost $7 million to install. 180 kW OTEC would require several of them. The distances the water needs to be transported mean long sections of fixed pipe and rising costs, due to the detailed planning requirements. The rigid pipes are prohibitively expensive to manufacture, transport, and install for small-scale OTEC.

The burden of proof lies on the seller: still a problem for traditional OTEC companies.