Stanford Environmental Consulting

OTEC in Cuba

photo courtesy Lockheed Martin Corporation

Case Study: Ocean Thermal Energy Conversion in Cuba

Client: Environmental Defense Fund

Broader Challenge

  • Small island developing states (SIDS) are largely dependent on foreign energy imports
  • Consequently, their economies have little protection from price volatility and supply disruptions, and often suffer from steep energy costs
  • Renewable resources have seen low penetration in many SIDS to date

Ocean Thermal Energy Conversion (OTEC)

  • OTEC has been widely speculated as a sustainable solution to the energy security challenges of SIDS
  • Additional benefits include alleviating food and water security issues
  • Lack of operational data and successful demonstration make it difficult to corroborate these points

Approach

  • Identify the main drivers behind implementing OTEC in Cuba
  • Create a value proposition for OTEC based on the total system benefits – energy, water and food production
  • Conduct a detailed economic analysis to determine expected project returns and key sensitivities
  • Identify major financial and technological risks

Results

  • Cuba’s precarious energy situation, water shortages and insufficient domestic food production create a strong value proposition for OTEC
  • The lack of historical success confines OTEC development to small-scale (1-10 MW) installations
  • At this scale, OTEC projects are immensely unprofitable
  • Carbon emission reduction credit schemes could not render these projects financially viable
  • Cuba should not proceed with a small-scale OTEC project due to large project uncertainties, expected duration to implementation and availability of other renewable resources