Algae Systems Eyes Biofuels Commercialization

Sep 28, 2014

Algae biofuels circle

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Algae Systems, a five-year-old start-up, announced last month that it has completed a pilot plant in Daphne, Alabama, and demonstrated the ability to produce algae biofuel at a price lower than the current cost of fuel. This was accomplished by implementing concepts from NASA’s OMEGA project, and leveraging acquired assets and patents from GreenFuel – an algae producer start-up that closed in 2009 when its process proved to be too expensive to operate on a large scale. The commercial viability of Algae Systems’ process, however, hinges on one key factor: integration.

Significant technology and infrastructure-related barriers to the commercialization of algae biofuels have caused even oil and chemical majors to pause development plans and divert investment to other areas of research.  Factors such as capital costs, insufficient yields, high utilities requirements, and inappropriate space allocations have been cited by many companies and research institutions over the past several years as key issues with algae technology at the pilot or demonstration scale.

So, what makes Algae Systems more optimistic about its technology and commercial potential? The company has developed a process that is integrated on multiple levels: raw materials, energy, and process technologies.

Wastewater, rich in phosphates, and naturally occurring CO2, are used as a raw materials source to grow the algae in plastic bags. These bags are placed on the water’s surface to utilize natural agitation provided by water currents and heat by direct sunlight, thereby greatly reducing utilities consumption and requirements of the process.

Algae Systems’ hydrothermal liquefaction technology turns algae and sewage into a product similar to crude oil, which can be further modified to create various types of fuel (e.g., diesel and/or jet fuels).

The facility also purifies the spent wastewater after the algae is fully harvested. As such, operational costs are shared between algae growth and wastewater purification, and the profits captured by the process can be shared between the co-production of biofuel and purified wastewater.

On the commercial scale, however, will this model and level of integration be enough? Many biofuel start-ups fail to reach the commercialization stage as scale-up production economics and geographic feasibility become debilitating factors.

In the case of Algae Systems, securing a sufficient offshore growing area with adequate intensity of waves for agitation and high enough levels of solar insolation to heat the bags is critical to successful implementation.  It is also important to consider whether its process will require more complex infrastructure and/or maintenance at the commercial scale – for example, equipment to keep the floating bags of algae in place during incubation or during harvesting.

While Algae Systems’ business model taps into multiple revenue streams – a common approach in the petrochemicals industry, for example, the integration of pulp and paper mills with biochemical or biofuels production – stress-testing will help determine if the profit acquired through water purification offsets any potential negative margins of algae biofuels production.


Related Content:  The Integration of Pulp and Paper Mills with Biochemical or Biofuels Production