Lockheed signs deal to design largest ocean thermal electric plant WASHINGTON (Reuters) - Leading U.S. defense contractor Lockheed Martin signed a contract on Wednesday to design the biggest power station fueled by differences in ocean temperatures, a 10-megawatt plant that would provide electricity for a new Asian resort. The contract between Lockheed and Beijing-based Reignwood Group, a Chinese consumer products and lifestyle firm, is the initial 10-month stage in a 3-1/2-year effort to build the green energy electric plant, which would generate power using a process known as ocean thermal energy conversion (OTEC). This is just more or less the tip of the iceberg and what both parties are most interested in is ultimately getting the plant built so we can offer it to other customers. And that's where the business is for Lockheed," said Dan Heller, vice president of new ventures for Lockheed's Mission Systems and Training unit. Heller declined to say how much the contract is worth for Lockheed or to estimate the potential cost of constructing the facility, which uses a process that has been tested in smaller plants but has never been developed on a commercial scale. Other companies and organizations are pursuing OTEC energy projects as well. But Heller said the facility planned for Reignwood would "be magnitudes larger than anybody else, including ourselves, have ever attempted." Heller said the two firms agreed to an initial 10-month contract for design of the plant because of the uncertainty surrounding the ultimate cost of a small commercial-scale facility. He said the design phase would help clarify the cost. Heller said Reignwood and Lockheed had discussed the likely high and low costs of the project and were comfortable with the range, adding "at this point we just need to know the exact number so we can pen it into the next contract." A 10-megawatt plant would be large enough to supply electricity to some 10,000 small homes or condominiums. Heller said that once Lockheed had proven the concept with a small plant, it planned to scale up the technology to build a 100 megawatt plant, "which becomes a lot more economically viable." "At that point we've got a market where we could go sell to the...countries around the world that have the right oceanographic resources," he said. The OTEC process uses temperature differences between warm tropical surface waters and cold waters deep below to power a steam-driven turbine. Closed system plants like the one Lockheed plans to build use a liquid, such as ammonia, with a low boiling point. Warm surface waters are used to convert the ammonia to gas, which drives the turbine, and deep cold water is used to convert the steam back to liquid. Some 80 countries around the world's equator have the right ocean temperature differences to make the process feasible. That's a market Lockheed hopes to begin to tap over the next three to four years as it is able to prove the technology at a commercial scale. "I do believe that sometime during the course of this project, we will begin work on the 100 megawatt design," Heller said. In my estimation, starting in about five years from today, we're going to be in a position to start marketing the 100 megawatt and the 10 megawatt version globally. Heller said Reignwood was still looking at potential sites for the plant. When the two companies began work on the venture in April, Hainan island in southern China was seen as a possible site. Heller said Reignwood had been working on site selection in more detail since then and had several potential locations. Editing by Warren Strobel and Leslie Gevirtz