OTEC potential on the Philippines

An interesting article was recently published by the Manilla Bulletin Publishing Corporation.

Due to its geographical position near the equator, the use of ocean thermal energy can be very interesting in the seas and streets of the Philippines. Currently, the UK company Energy Island Bell Pirie Ltd. is planning to construct a 10-megawatt closed-cycle OTEC facility in Cabangan, Philippines as a pilot project. Ms. Latimer, director of Energy Island Bell Pirie, emphasized that OTEC has the largest potential amongst marine energy resources such as wave energy and tidal energy , and the sites offer the possibility to operate the OTEC plants year round, providing base load power supply.

However, OTEC investment costs are still high. For the 10 MW pilot plant, the investment per megawatt amounts to $22 million. The help of a support scheme for renewable energy is therefore very important for the OTEC plant to provide energy at competitive prices. As for the Philippines, the Renewable Energy Act (2008) has identified OTEC as one of the technologies that should be promoted in order to safeguard the country’s security of energy supply. Unfortunately, in the Feed-In-Tariff (FIT) support scheme implemented in the Philippines the height of the tariff for OTEC has not yet been determined, as the national Energy Regulatory Commission (ERC) stated that “further study and data gathering” is required before the feed-in-tariff can be fixed. According to Ms. Latimer, this is understandable as it is the first time a regulatory body has been asked to set a FIT for OTEC.

Bathymetry for contract site, red tube indicates proposed location of plant
Bathymetry for contract site, red tube indicates proposed location of plant (© Energy Island Ltd.)

Energy Island proposed a tariff for the OTEC plant of PHP 17.65 per kWh (currently approximately $ 0.42). Ms. Latimer confirmed to OTEC News that this tariff was based on a set of parameters provided by the ERC, “including technical and EPC, operating, debt and equity, tax and economic assumptions”. However, the ERC did not accept the P17.65 per kWh tariff and hence, the challenge for Energy Island is to “address their concerns and undefer their decision by presenting further data”.

When OTEC is supported by the right mechanisms, more experience can be gained, generation costs will go down and OTEC plants will become competitive with fossil energy production, according to the article. Also, scaling up the capacity of OTEC facilities to utility-sized power plants costs will go down quickly. Ms. Latimer expects that over 10 years, a 100MW OTEC plant can be installed with a generation cost of 6.56 Philippine pesos (PHP) per kWh.

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