Upscaling scenarios for ocean thermal energy conversion with technological learning in Indonesia and their global relevance

Abstract

Ocean Thermal Energy Conversion (OTEC) is a promising renewable energy technology that is the most economical at large scale. But contemporary literature does not address how OTEC could reach such scale with current technology, and what the techno-economic impact of location-dependent factors and technological learning are. This paper tackles these issues by simulating OTEC's upscaling with a model that implements OTEC to meet local electricity demand and extrapolates to the global relevance of OTEC. The model uses a learning rate for investment costs and cost of finance. This study shows that up to 45 GW of OTEC capacity can be installed in Indonesia with national demand coverage of 22% in 2050. Even with small cost reduction rates, OTEC could be profitable and cost-competitive against other power generation technologies with an aggregated Net Present Value (NPV) of up to US$ 23 billion. OTEC's upscaling could be funded via state budget reallocation or international financial institutions, e.g. via the feed-in tariff suggested in the paper. However, large-scale OTEC is only feasible in regions with high electricity demand and until that size is reached, upscaling must be coordinated globally, e.g. with the proposed upscaling strategy. To contribute to the global energy transition, OTEC needs to grow by 28% per year, a rate similar to wind power and solar PV. This paper provides good reasons to fight for the attention of global decision makers and future research could focus on refining the concepts of this study.