Ocean power--a resource often located near large population centers--could ultimately generate 25 percent of today's total electricity usage, said report co-author Travis Bradford, president of the Prometheus Institute for Sustainable Development.
In the next six years, electricity production from the ocean could swell from just 10 megawatts now to 1 gigawatt, a $500 million market.
Before ocean power becomes an economic reality, however, there are huge hurdles to overcome, including too many competing turbine designs, lengthy environmental permitting, costly installation, and, in many cases, a harsh working environment at sea.
Research in ocean energy is active, with most of it done in the U.K. There are a number of pilot projects in the works which, if completed, would total 650 megawatts of electricity production. That's roughly the size of one coal or natural gas power plant.
But charting the course from prototype to grid-connected generator has proven tricky, according to a number of speakers at an event last week hosted by the UK Trade and Investment initiative, Flagship Ventures, and Greentech Media.
"The challenges have been greater and the timelines have all slipped. It hasn't been an easy ride so far," said Andrew Mill, CEO of the U.K.'s New and Renewable Energy Center (NaREC). "Most of the devices to date haven't actually reached the water."
Many wave power machines are designed to capture the energy of the wave's motions through a bobbing buoy-like device. Another approach is a Pelamis wave generator, now being tested in Scotland and in Portugal, which transfers the motion of surface waves to a hydraulic pump connected to a generator.
Tidal power typically uses underwater spinning blades to turn a generator, similar to how a wind turbine works. Because water is far more dense than air, spinning blades can potentially be more productive than off-shore wind turbines for the same amount of space.
In addition to being renewable, another key advantage of ocean power is that it's reliable and predictable, said Daniel Englander, an analyst at Greentech Media.
Although they can't generate power on-demand like a coal-fired plant, the tides and wave movements are well understood, giving planners a good idea of energy production over the course of year.
Because it's an immature industry, ocean power is more expensive than other renewables. In the coming years, the costs are projected to go down to about the range of wind and solar today, according to Greentech Media. "But the fact that you know when the generator is going to spin gives you a lot more value," Englander said.
Wind circa 1980?
Many people consider ocean energy to be roughly at the same stage that wind power was at in early 1980s: there were a number of competing turbine and blade designs, and the cost of wind power was far higher than it is now.
As the number of ocean generator types consolidates and components become standardized--as has happened in wind power--the costs of ocean power devices should go down.
The visible portion of an underwater turbine that captures tidal energy in Port MacKenzie Inlet in Alaska. (Credit: Ocean Renewable Power)
There has been about $500 million invested in ocean power since 2001, mostly in the form of government research and some venture capital, according to Greentech Media. That's tiny compared to wind or solar; several solar start-ups have individually raised more than that in the past year.
The report's authors predict that venture capitalists will be investing in ocean power as they seek new green-technology areas.
Big energy companies have dabbled in ocean power as well. General Electric purchased a stake in Pelamis Wave Power, while Chevron and Shell have invested in ocean companies through their venture capital arms, Englander said.
One positive sign is that ocean power appears to be developing quicker than wind, said John Cote, a vice president at General Electric's financial services arm.
"The wind industry, their Valley of Death (from product prototype to commercialization) was much longer," Cote said. "The development of standards is happening much quicker in the marine industry."
But despite the optimism, life on the water is tough, according to executives at ocean power companies.
With almost no infrastructure around the industry, companies need to build a lot of their own equipment. To install and test devices, they have to hire expensive vessels, typically used for offshore drilling.
Ocean Renewable Power is testing two of its horizontal turbine design tidal machines in Maine and Alaska. It's working on a new design that uses composite materials instead of steel, which it hopes to finish by the end of year and test extensively next year.
While working in freezing temperatures and 30-mile-per-hour winds in the Bay of Fundy off the Maine coast, it found that "everything that can go wrong, will go wrong," said Ocean Renewable Power CEO Chris Sauer.
Most of the failures were related to weather and marine conditions and equipment problems. "As a start-up, we have to make our own instrumentation systems put together on the cheap," he said.
Wavebob's wave-power machine. Bobbing devices that convert wave motion to electricity are one of the most common designs. (Credit: Wavebob)
New York City's East River, meanwhile, is the test site for another tidal power installation being led Verdant Power, which makes underwater turbines that get energy from changing currents.
In the space of three weeks, all six turbines being tested failed the same way -- a mechanical problem in the connections point between the blade and hubs, said Ronald Smith, Verdant Power's CEO.
But the biggest hurdles with the project has been environmental concerns, he said
Regulators want to make sure that fish, or other marine life, will not be killed in the blades. The company has equipped its devices with acoustic and other sonar devices to gather data for regulators, Smith said.
Another big potential cost for ocean power devices is operations and maintenance. Simply getting vessels--and staff--to service machines can be expensive, making the "survivability" of ocean energy gear a top priority.
Executives at the panel predicted that ocean power installations in the future will be several units, rather than one large device. For example, Ocean Renewable Power's 250-kilowatt modules can be stacked on top of them other, so if one machine fails, the entire operation isn't taken offline.
Even relatively successful companies--like Wavebob, which is set to build a 250-megawatt ocean power installation in Ireland--are doing software simulations, environmental reviews, and additional engineering to increase the odds of success.
"We're stopping on the edge of commercialization and taking two steps backward," Derek Robertson, the general manager of the company's North American business. "We're investing in detailed operations and systems engineering process to retire risk."
Martin LaMonica is a senior writer for CNET's Green Tech blog. He started at CNET News in 2002, covering IT and Web development. Before that, he was executive editor at IT publication InfoWorld.
By Martin LaMonica