Document Type

Working Paper

Date of this Version

4-2011

Abstract

In the spring of 2010, a CBE 459 design team focused on cultivating algae with the SimgaeTM Algal Biomass Production System, extracting algal lipids using OriginOilTM single-step extraction technology, and converting lipids into green diesel fuel. It was determined that the process was profitable, but required a staggering capital investment of 2.8 billion dollars. In the past year, both public and private institutions have joined the race to produce biofuels from an algal feedstock in an economically responsible manner that is by maintaining profitability while minimizing high capital costs. The intention of this report is to contribute to the global discourse on alternative-fuels and to reevaluate the promise of algae as a renewable resource for alternative fuels in light of the latest research and technological advances.

The algae-to-biofuel venture was segmented into three modules: algal cultivation, lipid extraction and lipid processing. Each module was studied thoroughly and several strategies were proposed for the reduction of its associated fixed, capital and variable costs. As contrasted with a previous study, it was concluded that heterotrophic algal cultivation and transesterification lipid- processing technologies would improve the efficiency and reduce the total capital investment. Once each module was designed in detail, the three segments were stitched together to perform an overall economic analysis. Based on the current market price of $3.30 per gallon for pure biodiesel, a project life of 15 years, and a 15% discount rate, the results indicate that an algae-to- biodiesel process may not only be profitable, but also a sound and reasonable investment. The project’s projected Net Present Value (NPV) is $1.3 billion and the Return on Investment (ROI) was determined to be 32%.

Although these economic results are promising, they are based on an analysis that necessarily invoked highly uncertain postulates in the dearth of published data. For example, the kinetics used to model the lipid-processing module were based on data collected for palm oil at similar conditions, while the details of lipid-extraction energy usage for a high-density slurry were approximated on the basis of results for low-density slurry. Furthermore, it was concluded that the income from the sale of the algal biomass byproduct of lipid-extraction is a critical factor in the profitability. Based on its protein content, this report considered the use of algal biomass as animal feed and determined its economic worth accordingly. However, to ensure the economic success of biodiesel production, an additional analysis should focus on algal usage of biomass as a feedstock and confirm the safety of its use. Further analyses could examine other potential applications for the byproduct, including opportunities within the pharmaceutical and power generation industries. Overall, in order to convince investors that the attractive economics published in this report may be translated into actual earnings, it is critical to move beyond modeling. Pilot studies must be conducted in order to bolster the proposed algae-to-biodiesel venture with experimental data and identify possible pitfalls.

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Date Posted: 24 July 2012