Ocean water covers a vast portion of the Earth's surface and is also the world's largest solar energy collector. It plays an important role in maintaining the global energy balance as well as in preventing the Earth's surface from continually heating up because of solar radiation. The ocean also plays an important role in driving the atmospheric processes. The heat exchange processes across the ocean surface are represented in an ocean thermal energy budget, which is important because the ocean stores and releases thermal energy. The solar energy absorbed by the ocean heats up the surface water, despite the loss of heat energy from the surface due to back-radiation, evaporation, conduction, and convection, and the seasonal change in the surface water temperature is less in the tropics. The cold water from the higher latitudes is carried by ocean currents along the ocean bottom from the poles towards the equator, displacing the lower-density water above and creating a thermal structure with a large reservoir of warm water at the ocean surface and a large reservoir of cold water at the bottom, with a temperature difference of 22 degrees C to 25 degrees C between them. The available thermal energy, which is the almost constant temperature water at the beginning and end of the thermocline, in some areas of the oceans, is suitable to drive ocean thermal energy conversion (OTEC) plants. These plants are basically heat engines that use the temperature difference between the surface and deep ocean water to drive turbines to generate electricity. A detailed heat energy budget of the ocean is presented in the paper taking into consideration all the major heat inputs and outputs. The basic OTEC systems are also presented and analyzed in this paper. Copyright (C) 2011 John Wiley & Sons, Ltd.