Lockheed Martin plans to build a green energy plant that will use variations in ocean water temperature to generate electricity.
Lockheed signed an agreement in Beijing with the privately held Reignwood Group to build the 10-megawatt offshore plant that will provide energy for a new luxury resort on Hainan island in southern China.
It will use what is known as ocean thermal energy conversion technology, or OTEC.
"This plant will be the largest OTEC facility ever built. We believe this to be the first signed agreement for an offshore OTEC plant of a size significant enough to power a community," said Dan Heller, vice president of new ventures for Lockheed Martin Mission Systems and Training.
A 10-megawatt plant, able to power several thousand homes, would be a major advance in the use of OTEC and experts say it would be a stepping stone toward building 100 megawatt plants capable of powering small cities.
Best known for making jet fighters and missiles, Lockheed has long been involved in other areas beyond armaments.
Last month, it said it had found a way to slash the amount of energy needed to remove salt from seawater.
"Lockheed Martin has been leading the way in advancing this (OTEC) technology for decades," Heller said.
Lockheed is not the only firm developing OTEC.
Several countries and companies have announced plans for intermediate-sized plants up to about 10 megawatts, most of them based on land.
Jim Greenberg, an executive with Ocean Thermal Energy Corp., whose company is working on several small plants, said the technology was ripe for development because of high petroleum prices.
Lockheed said the agreement with Reignwood would create at least 1,000 jobs, mainly in the USA, and could lead to construction of additional OTEC power plants ranging in size from 10 to 100 megawatts with a potential value of several billion dollars.
The OTEC process uses warm tropical waters to power a steam-driven turbine. Cold water is pumped from the depths of the sea to condense the steam back into liquid.
Closed-system plants like the one Lockheed plans to build use a liquid such as ammonium that has a low boiling point to create the steam.
Warmer surface waters pass by a heat exchanger, causing the ammonium in the closed system to boil and create the steam that drives the turbine.
Cold deep-sea water is pumped by another heat exchanger to condense the ammonium back to a liquid.
The Thailand-based Reignwood Group specialises in luxury resorts and goods but also has lifestyle, low-carbon and green energy investments.
The company plans for the new resort to be "net zero", meaning it consumes no more energy that it produces.