NC State University

America’s still thirsty for biodiesel, but where are all the algae farms?

Brian Schuster, Class of ’13

A number of companies growing algae for large-scale biodiesel production have received large investments in the past few years. Oil companies Exxon Mobil, BP, Chevron, and Valero have followed one after the other in forming strategic partnerships with these startups. Even Bill Gates has hopped on the bandwagon, but where is the low-cost algal biodiesel promised by these ventures years ago?

Over the past decade, algal biodiesel has been flaunted as the knight in shining armor for the renewable fuels industry. Over four years ago, a handful of companies have made commitments to produce commercial-scale quantities of biodiesel from the promising green creatures. To date, many of these commitments have not been met as companies realize there are more hurdles to commercialization than they had previously anticipated.

Challenges to Production

One of the most prominent issues with algae is their innate genetic code. Many algae only produce the oil needed for biodiesel when they are low on food, but with adequate nutrition, they tend to produce a much larger portion of undesirable carbohydrates. Researchers have vastly improved the oil yields through genetic engineering, but it is a timely process that requires a careful understanding of the organisms’ genes and metabolism.

As production is scaled up, engineers and scientists also face the problem of keeping the algae comfortable. Algae typically prefer calm environments, whereas the turbulent conditions of large, continuous culture systems are often unfavorable for growth. Furthermore, there has to be some way to distribute sunlight evenly to all of the algae cells without excessive agitation–assuming photosynthetic algae are used. Many in the field are investigating innovative solutions from light pipes to intelligently designed ponds that can provide efficient means of spreading light to individual cells. Regardless, the U.S. National Renewable Energy Laboratory and university researchers have concluded that open ponds are the only economical route to commercial production. Hurdles like these present tough decisions for the many startups attempting to reach large-scale success.

Race to Commercialization

One of these companies, Solazyme, appears to have successfully overcome these hurdles, and they’re growing quickly. In the past year, the California-based company has experienced 63% employee growth and reached nearly $40 million in sales–impressive in comparison to its competitors’ performance. The U.S. Navy has purchased thousands of gallons of their diesel fuel and has contracts to buy more. Where others have reached standstills, Solazyme appears to be succeeding because it takes a unique approach to algae production. While most startups use phototropic algae, which use sunlight to grow, Solazyme is developing a high-growth heterotrophic alga that grows off of other plant-based materials. This significantly reduces costs by allowing the algae to grow in smaller spaces, whereas other operations require vast arrays of algae tanks to harness the sun’s energy.

The Winning Strategy

The up-and-coming company has not only managed to excel with their technology, but they have also taken a novel approach in developing their business strategy. Rather than extracting the target ingredient, oil, from the algae and throwing the rest away, Solazyme uses many other components of the algae in other sectors. They recently entered a joint venture with Roquette Frères to develop the nutritional outputs of their workhorse algae, which essentially come down to the algae’s ability to create tailored edible oils from crop residues and other plant materials. The nutrition division has incorporated algal-based ingredients into baked goods, mayonnaise, salad dressing, and egg substitutes. They are now working on meat substitutes and enhancers that could result in large contracts with Tyson Foods and Hormel Foods.

Not only does Solazyme sell its algal oils for foods, but they are also targeting a number of other consumer products. Plane de-icing fluids, shampoo, and soap all require specific types of oil that the algae can provide. They are also making an appeal to the cosmetics markets with applications for toiletries, makeup, hair care, and skin care.

Solazyme’s broad-reaching business strategy has served it well, and it may not take long for others to follow suit. As we look to the future, we can likely expect strong competitors in the algal fuel industry as technology improves and businesses mature…then we’ll start seeing those long-awaited algae farms.

Read More

Milledge J. 2010 Feb. The Challenge of Algal Fuel: Economic Processing of the Entire Algal Biomass. Energy Bulletin. <http://www.energybulletin.net/51501>. Accessed 2012 June 21.

Solazyme. 2012. Market Areas: Overview. <http://solazyme.com/market-areas>. Accessed 2012 June 21.

Westenhaus, B. 2008 Dec. The Algae Problems. New Energy and Fuel. <http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/12/22/the-algae-problems/>. Accessed 2012 June 21.

LaMonica M. 2011 Mar. Algae-oil maker Solazyme files to go public. <http://news.cnet.com/8301-11128_3-20042446-54.html>. Accessed 2012 June 21.

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