Recent progress in the economics of ocean thermal energy conversion: Critical review and research agenda

Ocean thermal energy conversion (OTEC) is a Renewable Energy Technology (RET) with a global theoretical potential of up to 30 TW. However, OTEC's economic potential is unknown as it is still an immature technology with no commercial plant operating. This paper reviews recent academic and industrial literature since 2005 to provide an overview and critical discussion of current practices in assessing OTEC's economics. Seven knowledge gaps are identified; (1) Current economic analyses focus on individual plants instead of the collective economic potential within spatial boundaries; (2) Natural, location-specific influences on the real net power output are mostly omitted. There is uncertainty about (3) the capital costs on both system and component level as well as the (4) operational costs and properties like useful lifetime. (5) The impact of interest rates and its selection are often not argued for in literature. (6) Technological learning is predominantly omitted in OTEC literature and if treated, it deviates from insights on technological learning. (7) Economic analyses are mostly limited to the Levelized Cost of Electricity (LCOE), while other tools like payback period and Internal Rate of Return (IRR) are neglected. These shortcomings originate mainly from the lack of experience and long-term operational data. For each knowledge gap a recommendation for future research is proposed resulting in a research agenda on OTEC and its economics.