A decades-old plan to generate electricity in Hawaii by exploiting differences in ocean temperature will take a big step forward with the planned construction of a test generation plant at the Natural Energy Laboratory of Hawaii Authority technology park on the Kona Coast.

NELHA said it has selected OTEC International LLC to build the 1-megawatt demonstration plant that will use ocean thermal energy conversion technology first tested in Hawaii in the 1970s.

Baltimore-based OTEC International will combine proprietary technology with off-the-shelf components for the demonstration project, which will use cold water from the deep-water pipes at NELHA’s Hawaii Ocean Science and Technology Park at Keahole Point, officials from OTEC International and NELHA said.

Privately funded OTEC International said it has not relied on any government money to reach its goal and expects to be first-to-market with a commercial ocean thermal energy conversion (OTEC) plant. The company has a preliminary agreement with Hawaiian Electric Co. and is negotiating a power purchase agreement with HECO for a 100-megawatt plant off the coast of Oahu. A HECO spokesman confirmed the company was in negotiations with OTEC International, but said he could not comment further.

OTEC International was selected from four submittals to NELHA in response to its call for proposals. NELHA’s staff and Research Advisory Committee each ranked OTEC International’s proposal substantially higher, said Greg Barbour, NELHA’s executive director. The next step will be for OTEC International to negotiate a lease with NELHA. The company hopes to have the plant operational by 2014.

"For them the goal is to demonstrate they can make this project work," Barbour said. "That will lead to acceptance of their technology and will assist them to getting the funding necessary to build a full-scale plant. They need a place to test their technology, and that’s what we’re all about." Barbour said.

The main attraction of OTEC is that the process can provide firm power using an inexhaustible resource: ocean water. In an OTEC system, warm water from the ocean’s surface is used to heat up a fluid with a low boiling point, such as ammonia. Vapor from the boiling ammonia turns a turbine that drives a generator to produce electricity. Deep-sea water is pumped up to cool the ammonia and return it to a liquid state to be used again.

OTEC International receives funding from The Abell Foundation, a philanthropic group based in Baltimore which also invests in promising technologies with social objectives, such as alternative energy.

OTEC technology first came to Hawaii in the 1970s when the Arab oil embargo sent crude prices soaring, highlighting the state’s lack of energy security. The state launched an OTEC test project on a barge off the Kona Coast that successfully produced a small amount of electricity for a three-month period in 1979. But with the eventual return of cheap oil, interest in OTEC fizzled.

"OTEC’s history is firmly rooted at NELHA. We see this as bringing it home in a sense," said Eileen O’Rourke, OTEC International’s chief operating officer. "There will be a lot of show-and-tell associated with this demonstration, and NELHA is an appropriate location for that."

The OTEC International effort is not affiliated with another project at NELHA in which Honolulu-based Makai Ocean Engineering and Lockheed Martin are testing a heat exchanger, the device that is at the heart of an OTEC system.