Lockheed Martin Corporation (LMT - Free Report) has entered into an agreement with Reignwood Group to develop an Ocean Thermal Energy Conversion (OTEC) pilot power plant located off the coast of southern China.
Per the agreement, this offshore plant with an electric generation capacity of 10 megawatt (MW) will be designed by Lockheed Martin. The plant will supply all the power required by a green resort being built by Reignwood Group.
Ocean Thermal Energy Conversion is a process that can produce electricity by using the temperature difference between deep cold ocean water and warm tropical surface waters. This technology is best suited for island and coastal communities where energy transportation costs for other sources of power are very expensive.
Like other renewables, namely, solar and wind, OTEC plants provide clean and sustainable energy. An OTEC facility with an electric generation capacity of 100MW produces equivalent energy that is produced by 1.3 million barrels of oil in a year. the same time it lowers carbon emissions by half a million tons.
When compared to other renewable energy technologies, power from OTEC plants can be produced round the clock 24x7. OTEC is however a highly capital intensive process. Yet, higher electricity costs and increased concerns for global warming have made the use of OTEC attractive in tropical island communities.
Once the Chinese plant comes online, both the parties intend to hone their skills to improve the design of additional commercial-scale plants to be built over the next decade. Going forward, this agreement could build the foundation for the development of several additional OTEC power plants in the range of 10MW to 100MW.
This is not the first time that the largest defense contractor, Lockheed Martin has been involved in an OTEC agreement. Previously, Lockheed Martin tied up with Makai Ocean Engineering for the development of 100MW OTEC plants for island communities in Hawaii and Guam.
The company presently retains a short-term Zacks Rank #3 (Hold).
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