Ocean thermal energy conversion (OTEC or OTE) uses the temperature difference that exists between deep and shallow waters to run a heat engine. As with any heat engine, the greatest efficiency and power is produced with the largest temperature difference. This temperature difference generally increases with decreasing latitude, i.e. near the equator, in the tropics. Historically, the main technical challenge of OTEC was to generate significant amounts of power efficiently from this very small temperature ratio. Changes in efficiency of heat exchange in modern designs allow performance approaching the theoretical maximum efficiency.

The Earth's oceans are continually heated by the sun and cover over 70% of the Earth's surface; this temperature difference contains a vast amount of solar energy, which can potentially be harnessed for human use. If this extraction could be made cost effective on a large scale, it could provide a source of renewable energy needed to deal with energy shortages and other energy problems. The total energy available is one or two orders of magnitude higher than other ocean energy options such as wave power; but the small magnitude of the temperature difference makes energy extraction comparatively difficult and expensive, due to low thermal efficiency. Earlier OTEC systems had an overall efficiency of only 1 to 3% (the theoretical maximum efficiency lies between 6 and 7%). Current designs under review will operate closer to the theoretical maximum efficiency. The energy carrier, seawater, is free, though it has an access cost associated with the pumping materials and pump energy costs. Although an OTEC plant operates at a low overall efficiency, it can be configured to operate continuously as a Base load power generation system. Any thorough cost-benefit analysis should include these factors to provide an accurate assessment of performance, efficiency, operational, construction costs, and returns on investment.

The concept of a heat engine is very common in thermodynamics engineering, and much of the energy used by humans passes through a heat engine. A heat engine is a thermodynamic device placed between a high temperature reservoir and a low temperature reservoir. As heat flows from one to the other, the engine converts some of the heat energy to work energy. This principle is used in steam turbines and internal combustion engines, while refrigerators reverse the direction of flow of both the heat and work energy. Rather than using heat energy from the burning of fuel, OTEC power draws on temperature differences caused by the sun's warming of the ocean surface.

The only heat cycle suitable for OTEC is the Rankine cycle using a low-pressure turbine. Systems may be either closed-cycle or open-cycle. Closed-cycle engines use working fluids that are typically thought of as refrigerants such as ammonia or R-134a. Open-cycle engines use the water heat source as the working fluid.

CETO is a wave energy technology that harnesses the power of the ocean waves to generate electricity or produce desalinated water. CETO is owned and operated by Carnegie Wave Energy Limited (ASX: CWE), the Australian ASX-listed clean tech developer. Carnegie will own and operate all commercial CETO wave farms in the Southern Hemisphere. In the Northern Hemisphere CETO wave farms will be joint ventures with CETO technology licensee, EDF Energies Nouvelles SA (EDF EN), the renewable subsidiary of French energy giant Électricité de France (EDF). The technology development is being demonstrated at commercial scale in 2010 off Garden Island in Western Australia, home of Australia's largest naval base HMAS Stirling. Subsequent projects may happen at La Reunion Island and off British Columbia where Government grants have been awarded.

Named after a Greek ocean goddess, the CETO system distinguishes itself from other traditional wave energy devices by being a fully submerged, pumping technology with the power generated onshore by a standard hydro-electric turbine system.

Submerged buoys are moved up and down by the ocean swell, driving pumps which pressurize seawater that is delivered ashore by a pipeline. Once onshore, the high-pressure seawater is used to drive hydro turbines, generating zero-emission electricity. Traditionally, wave technologies are characterized as offshore, floating power stations.

The high-pressure seawater is also used to supply a reverse osmosis desalination plant, creating zero-emission freshwater. Currently, seawater desalination plants are large emitters of greenhouse gases due to the amount of energy required to drive grid-connected pumps that deliver the high pressure seawater to reverse osmosis membranes which remove the salt from the seawater.

Other wave energy & CETO characteristics

• Wave energy is a renewable, zero emission source of power.
• 60% of the world lives within 60 kilometers of a coast, minimising transmission issues.
• Since water is about 800 times denser than air, the energy density of waves exceeds wind many times over, dramatically increasing the amount of energy available for harvesting.
• Waves are predictable in advance, making it easy to match supply and demand.
• CETO sits underwater, moored to the sea floor, meaning there is no visual impact.
• CETO units operate in deep water, away from breaking waves. The waves regenerate once they pass the CETO units, meaning there is no impact on popular surfing sites.
• CETO units are designed to operate in harmony with the waves, rather than attempting to resist them. This means there is no need for massive steel and concrete structures to be built.
• CETO is the only wave energy technology that produces fresh water directly from seawater by magnifying the pressure variations in ocean waves.
• Any combination of power and water can be achieved from 100% power to 100% water.
• CETO contains no oils, lubricants or offshore electrical components. It is built from components with a known sub-sea life of over 30 years.
• CETO units act like artificial reefs, because of the way they attract marine life.