Algae oil – Scaling, Breakthroughs and Costs of production

In my last post, I mentioned scaleable as a possible problem area in the algae oil sector. I also mentioned Robert Rapier, who has a great deal of experienceRenewable Fuel Pretenders, on The Oil Drum. Most “pretenders” sincerely believe that they have “cracked the code,” he writes, and that they are not pretenders, but contenders. But Rapier notes this: in fuel. He brings up the same point in his essay,

“What I have discovered in many of these cases is people often believe this because they have no experience at scaling up technologies. They might have something that works in the lab, but this can instill a false sense of confidence in those who have never scaled a process up.”

Scaling often requires the solution of a number of technological problems, some small and some large. In the same essay quoted above, Rapier also notes that “the potential for success falls rapidly as the number of needed [technological] breakthroughs pile up.” He asks us to imagine a new technology with “a 25% chance of achieving commercial viability in the next 20 years.” For all three hurdles to be cleared, there is only a 1.5% chance of success. Since algae fuel, he contends, has multiple technological hurdles, the chance for success, even in five or ten years, is not strong. Perhaps this explains the plethora of methods still being attempted. Not enough hurdles have been cleared to narrow the race track down to one or two, maybe three, lanes.

Many bets have, however, been placed on photobioreactors — a closed environment where CO2, nutrients and lights are controlled within glass (usually) tubing. The problem, like almost any prototype, is that the energy, or, in this case, the costs are still too high to produce a biofuel that can compete with fossil fuels. Rapier cites an analysis by PhD graduate Krasen Dimitrov in which he examines the technology and processes of GreenFuel Technologies (now defunct) and asserts that production costs (just production costs, mind you) for algae oil would be about $853/bbl or $20.31/gal. About eight or nine time where gas sells now.

In addition to Dimitrov’s analysis, Rapier cites a report commissioned by the British Columbia Innovation Council to assess the possibility of an algae fuel industry in B.C. The report looked at three methods of producing algae biofuel — photobioreactors, open ponds (called raceways because of their shape), and fermentors (that is, devices using fermentation). They came up with the following estimates for the cost of production:

  • Photobioreactors — $93.23/gal

  • Open raceways — $49.54/gal

  • Fermentors — $ 9.03/gal

Even at nine bucks a gallon, we’re not yet in the ballpark, because the estimate is just for the cost of production. No marketing, no distribution, no health insurance packages (in the U.S., anyway), no social security payments, and so on and so on. In short, none of the normal operating costs of a business — just production. And as for bioreactors, they are going to need an almost impossibly steep curve down to become viable in the near future. Rapier contends that there can be some cost improvements, some economies of scales, but that the main elements of production are basically fixed costs — things like building material, machinery, and land — and not subject to much in the way of improvement.But, all is not completely hopeless, as we shall see in the next post, as we just saw with fermentation in the BCIC study.

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