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Eric Wesoff | June 25, 2009 at 1:05 AM 5 Comments

Algae Fantasists Predict 1B Gallons Per Year by 2014

I want to believe that algae can make a significant contribution to our liquid fuels habit in the coming years. But wildly optimistic predictions based on scant evidence and stretched data are disingenuous and do a disservice to the entire industry.

Jim Lane of Biofuels Digest recently authored a forecast projecting that algal biofuels capacity will reach 1 billion gallons by 2014. That would be up from what is essentially, let me check, yes, zero algal biofuels capacity today. Biofuels Digest based its analysis on price and capacity projections for 2009 to 2014 from "leading companies in the field."  I am assuming that these price and capacity projections are based on little more than press releases and interviews from the likes of PetroAlgae, Solazyme, PetroSun, Solix, Sapphire and Algenol.  Some truth in those press releases and more than a little embellishment.

Here are the details of the forecast:

Algal Fuel/Capacity projections, 2009 to 2014

 

algaepricecap

 

Look at this chart a bit more carefully. From 2009 to 2010, capacity goes from 1Mgy to 41Mgy.  That's a pretty irresponsible number to forecast if you can't supply the disruptive force that makes capacity grow by more than 4,000 per cent.

Capacity then triples and slows down to a mere 100 percent growth for a few years. That reasoning would be based on believing the forecasted capacity increases of less-than-transparent OTC bulletin board firms and start-ups with no volume experience or sufficient cash to make that happen.

Further magic from the chart slashes the price by 25 percent for a few years and then the price drop accelerates in 2012 to about 60 percent.  In what alternative universe do markets behave like this?

More questionable forecasting methodology from Lane in this sentence:  "Costs are based on the lowest cost provider – not an average for all providers."  Does that make any kind of sense to base your forecast on the lowest fantasy price forecast?

More twisted logic follows. I can barely understand these non-sequitors: “The $9–$30 cost ranges cited in the latest research reflect today’s prices,” said Biofuels Digest editor Jim Lane.  “That’s already competitive in some nutraceutical and food markets – for example, a pound of olive oil retails for around $17 at my store, or about $120 per gallon. But like the computer market – costs are expected to come down quickly.”  I think this means that I will soon be able to buy olive oil at $1.20 per gallon.

More disinformation and misinformation follow: "33 percent of 2014 capacity is projected to use a closed system, photobioreactor (PBR) process, with 67 percent using open pond “raceway” systems." In 2012, 22 percent of projected capacity would utilize the closed PBR process, and 78 percent would utilize open ponds." These wildly innaccurate forecasts fly in the face of any research from smart algae people at NREL or our favorite algae realist – Dr. John Benemann. The abject failure and shuttering of GreenFuels also does not support any hope for PBRs as a cost-effective solution. PBRs are not cost effective, yet Lane predicts more than 300 million gallons of biofuel derived for PBRs. No way. Dr. Benemann flatly states that PBRs "do not work” and are useful only in supplying inoculum. 

Jim – I'm in the forecasting business myself. If I was going to make claims for 1,000X growth in production and a 10X cost reduction in five years I would have to back it up with good reasoning.  And I'm not seeing a lot of that in your claims.

Jim Lane's online bio here.

Greentech Media has a brief report on algae players and challenges available here. We tried to stick to a reality-based style of analysis. I've asked Mr. Lane for a comment on my critique and will publish his reponse if it comes.

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Comments [5]

  • russ 06/25/09 9:59 AM

    But they are looking for suckers - oops! I meant to write investors.

     Reply
  • PCS 06/25/09 3:39 PM

    All these projections are useless. 2014 is tomorrow….

    One thing is certain that Algae Crude is economically possible

    By 2014, there will be one or two plants producing 2000 - 4000 gallons / day of algae oil

    I kmow it as I am in it..

    Venture capital guys need to have smart experienced engineers instead of bean counters ELSE they will get RIPPED off BIGTIME… 

    BUT my experience tells me that they would STILL NOT LISTEN and get ripped off and the industry will suffer as a consequence….

     Reply
  • Keith Masavage 06/26/09 8:04 AM

    Unfortunately, too many non-verifiable facts are being thrown around in the alternative fuels market in general.  I have spent the last 7 months doing extensive hands on research and development in this area and there are both reasons to be hopefully optimistic and major hurdles that need to be overcome.

    First, I have watched in 8 days a vertical tubular bioreactor reach maximum density and start harvesting 1/3rd EVERY day.  The algae used was producing in excess of 50% oil by dry weight.  Replicated and deployed over many acres does yield significant amounts of oil, (oil prices not withstanding).  But simply using these numbers which are verifiable, a 2,000 acre farm will only produce 475,000 barrels per year.  That’s a HUGE farm! That will take years to build and work the production bugs out of!  And estimates are that it will cost in excess of $300m to build.

    So, the problems boils down to this…  1) getting costs down to a believable and amortizable level.  2) getting enough people in the game to have a significant number of 50 acre farms producing. (It would take 2,000 farms each with 2,000 acres in production to produce 1 billion gallons (~23m barrels).

    Current problems:  1) Money for doing this many farms.  50 farms each needing $300m is a lot of investment dollars.  Not a lot compared to what has been put in other industries to make them successful, but still a lot of money to be raised and a lot of investors (and bean counters to be convinced).

    2) Cost of water separation.  Still WAY too high.  Needs to be pennies per gallon.  Great progress on this with Algae Venture Systems in Ohio (see YouTube video) but the cost of their machine is still high for a lot of startups.  This is solvable.

    3) Contamination of selected species.  Doing things aseptically in a lab is one thing.  In ponds or raceways, don’t even try to cultivate a single species.  But in a closed loop bioreactor, you can have some success but it is extremely hard and adds huge amounts of cost to the system.  This is a real problem that someone needs to solve.

    4) Cost of oil separation.  This has been done for biodiesel, but no one has done large production scale separation with algae.  Hexane is problematic, dangerous and somewhat pricey.  Presses don’t get enough out. So someone needs to solve this cheaply and fast.

    5) Cost and yield of processing the residual bio-mass.  Even if you get 50% oil by dry weight, you will still have TONS of biomass EVERY DAY that you will need to process.  A group in Anderson Indiana is working on a very promising pyrolizer that may solve this in a real time or near realtime way.  Anaerobic digesting will work but needs to be tuned to this biomass, adds cost, takes up more land space and has to be managed as part of a holistic system.  The upside is, a 2,000 acre farm can produce enough bio-methane to fuel an iPower generator which will provide all the on site electrical needs for the facility and have excess power to light up 4,000 homes!  Someone needs to build the whole system doing this in real time.

    6) CO2 acquisition, filtration, distribution and dispensing.  Where are you going to find 50 power plants or factories producing CO2 with 2,000 acres of adjacent land?  To get anything close to the production quantities that are honestly possible, you have to have a CO2 source.  And it cannot cost a fortune to capture, scrub (if necessary), distribute and dispense.  Likewise, the system has to be smart!  You can’t put CO2 in during the night when photosynthesis isn’t happening.  You also have to monitor very closely you PH levels which will effect production quantities.  Again, holistic is the word here.  It has to be integrated by some seriously cleven systems integrators with a keen eye toward cost, automation, and real time.

    So, is it possible.  Yes.  I dispute most numbers I see, but I believe there are numbers that do make sense and this is a very real market.  To date, no one, PetroAlgae, Solazyme, PetroSun, Solix, Sapphire or Algenol has put a system together than defines the entire problem and presents a viable solution.  To date…  But someone will get there…

     Reply
  • M V Bhaskar 06/27/09 2:18 AM

    Hi

    I think all the Biodiesel from Algae companies are only talking about biodiesel from Blue Green Algae and a few from Green Algae.
    There are other sources too - Diatom Algae.
    If technology for oil extraction from Diatoms is developed then increase in biodiesel from Algae production can be quite fast.

    best regards

    Bhaskar
    http://www.kadambari.net

     Reply

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