WASHINGTON (Reuters) - Top U.S. arms maker Lockheed Martin Corp on Tuesday said it had signed an agreement with a unit of Ocean Power Technologies Inc to harness the motion of ocean waves to generate electricity off the coast of Victoria, Australia.
The A$230 million ($205.68 million) deal will produce the world's largest wave energy project using power buoys designed by Ocean Power Technologies that tap energy from the surface motion of waves.
Once completed around 2018 or 2019, the project will generate 62.5 megawatts of peak power, enough to meet the needs of 10,000 homes, Lockheed said. That is about one-third the capacity of a small coal-fired power plant in the United States.
"Ocean energy is a tremendously large, untapped resource which has global applicability," said Tim Fuhr, director of ocean energy for Lockheed. "You can pretty much get ocean energy on coastlines around the world. It's essentially clean and the fuel is free."
The agreement is part of a drive by Lockheed - the maker of F-35 fighter jets and coastal warships - to expand its foothold in the alternative energy business as it seeks to offset a slump in U.S. and European military budgets.
The company last year announced a deal with Chinese consumer firm Reignwood Group to design the biggest power station fueled by differences in ocean temperatures.
Energy from ocean waves is more predictable than wind and solar energy, and can generate electricity for more hours in the year than other alternate energy sources, Lockheed said.
The power buoys to be used in this project will rise about 30 feet out of the water, far smaller than wind turbines, which are typically 130 feet tall and have drawn public resistance.
Fuhr said Lockheed had worked with Ocean Power Technologies on several smaller projects for the U.S. Department of Energy since 2004, and kicked off initial work on this project about 18 months ago. Lockheed recently signed an agreement with Victorian Wave Partners, an Australian special purpose company owned by Ocean Power, to develop the wave project.
The goal is to complete the first phase by 2014 or 2015, producing about 2.5 megawatts of peak power, Lockheed said.
Fuhr said Lockheed hoped to leverage its design and engineering skills to help commercialize the new energy source in coming years. Under the agreement with Victorian Wave, Lockheed will handle overall management of the project, assist with design for manufacturing of the power buoys, produce selected components, and integrate the wave energy converters.
Lockheed was part of a consortium that built the first net-power producing facility in the 1970s based on ocean thermal energy conversion. Since then, it has invested tens of millions of dollars in ocean energy initiatives, Fuhr said.
He said Lockheed was beginning to see revenues from those investments, but declined to provide estimates for the amount. The company does not break down revenues by individual sectors.
Fuhr said he expected it to take until the 2020s before different forms of ocean energy accounted for a significant percentage of world energy production. Countries such as Australia and Britain were among the most forward leaning at the moment, although there are some U.S. projects as well, he added.
($1 = 1.1183 Australian dollars)
Reporting by Andrea Shalal-Esa; Editing by Lisa Shumaker