Market Value Pivoted Algae Biomass Productivity for Oil to Other High Value Products – Is Oil Still on the Horizon, Somewhere?

by Anju D. Krivov (Biofuels Digest/Lee Enterprises Consulting/GSR Solutions LLC) ... In the late 1990s, the low oil prices of less than $20 a barrel brought down the Algal Species Program’s initiative started in the 1970s oil crunch environment, whereas the recent below $50 oil environment pivoted the algae companies to high value markets, especially nutraceuticals. The 2015 $1,800B Biofuels & Biocrude market saw algae oil shifting into the background, when most of the profit and cash flow conscious algae oil companies diversified into promising expanding markets in several different lines of businesses including $11B Nutraceuticals (protein, carotenoids, pigments, bioactive compounds); $560 Food (ingredients for food, oil/fat replacement); $380B Feed ($370B livestock feed, $9B+ feed for aquaculture); $560B Agro Industry (waste treatment, soil enhancement, fertilizer); $80B Cosmetics. Several other markets increasingly became interesting for algae companies such as bioplastics, chemicals and other algae related products.

Nutraceuticals including Health Food protein and Astaxanthin have been the hot go to markets for most of the oil-focus algae companies, but markets are whispering something unexpected. Heliae’s memorandum of understanding with SkyNRG, an Amsterdam-based renewable aviation fuel partner apparently fell to backdrop – instead the main focus boosted production of algal astaxanthin, a powerful antioxidant nutrient and coloring agent from an alga with quite a mouthful of a name – Haematococcus pluvialis that took off with the joint venture partners in Japan. On the other hand, serving the high value protein nutraceutical market did not work out that well for Terra Via (formerly Solazyme) – that recently filed chapter 11 and entered into a “stalking horse” stock and asset purchase agreement with the Netherlands-based company, Corbion N.V., which is currently rescuing TerraVia’s assets to extend its own product portfolio into algae-based fatty acids and proteins. Sapphire Energy’s green crude integrated with nutraceuticals didn’t go too far either – the company was originally backed with a $144 million Series C investment funding built on a vision to make the algae crude competitive with petroleum by 2018 at the rate of a minimum of 5,000 barrels of production a day – expected to be feasible combined with nutraceuticals production by integrating a spirulina strain (a flagship algae strain of Earthrise Nutritionals) into its cyanobacteria and other algae strains for diversifying the product portfolio and risk minimization. However, a few months ago, the Algae World News boldly stated – since the beginning of this year, Sapphire Energy no longer exists – it was bought by a farmer for pennies on the dollar – nothing to do with biofuels anymore, only farming.

Apparently pivoting to nutraceuticals has not been enough to absorb business risk.

Algae biomass productivity for oil is at the forefront of R&D supported by the US Department of Energy (DOE) as validated by the recent request for proposals – BETO clearly stated its area of interest is not focused on engineering, but on algal strain improvement for increased areal productivity for biofuels in outdoor conditions with a focus on productivity, robustness, and composition.

The challenge of technologies built on genetically modified algae strains and technological advances.

Although it is true most of the algae biofuels related R&D has been and is focused in the open ponds systems area due to the cost efficiency of growing algae at larger scales. As far as efficacy of the closed systems and the line of businesses involving photobioreactors are being served by the innovations in the LEDs area showing good potential for growing genetically modified biomass in a closed environment provided by the photobioreactors that have been cost prohibitive in the past due to all the bells and whistles needed for maintaining the algae culture, until now when the cost of artificial lighting has significantly come down (think of getting LEDs 10 years ago and now). Years ago most of the algae researchers were skeptical about using high cost lighting, except for companies like OriginOil that right from the start built their systems on the artificial light for growing algae. Today, groups like Scotland based Algal Solutions for Local Energy Economy (ASLEE) consortium are actively working on the UK’s largest facility to deliver a 40,000 LED photobioreactor for investigating novel products at industrial scales. LED’s potential in running photobioreactors can’t be ignored anymore with all the innovations in this area. Likewise, sensors have emerged tremendously equally for the photobioreactors and open systems – giving tremendous time saving controls in the hand of algae growers, for instance the recent technological advances in the sensors area requiring no calibrations.

For a very long time, the norm has been to grow genetically modified algae in closed photobioreactors to avoid messing up natural ecosystems. The latest new development defies that – bouncing back Sapphire Energy has recently completed the first outdoor field trial of genetically engineered alga, Acutodesmus dimorphus for fatty acid biosynthesis and green fluorescent protein expression – in collaboration with its University partner, and most importantly with an approval from U.S. Environmental Protection Agency.

There is great merit in the Synthetic Genomics effort, but the big question not addressed in their story or other stories such as claiming to triple the algae biomass production is – what they would feed their algae with – commercially available nutrients?

... the big question is, and should be, how to cost efficiently feed massive algae growth with the dirt cheap throughput feedstocks.

Revisiting the Neil Tyson’s algae oil machine scenario – that machine may have to be filled with the algae not from that natural pond, but may be from the algae grown with other resources, such as, immense amounts of wastewater ending up in the municipalities, the runoff from agricultural waste otherwise creating algae blooms in the bays, rivers, and lakes and other such sources. READ MORE