Advanced Biofuels: pipedream or solid investment?

I read with much amusement this week two dueling editorials about advanced biofuels; one from the Wall Street Journal and the other – a reaction piece – from Biofuels Digest. One was pr0 and one against, I’ll let you strain your brain figuring out which was which. Editorial boards have plenty of information to pick from to illustrate a variety of contentions – from advanced biofuels are a “march of folly” paid for with “an invisible tax paid at the gas pump” to biofuel as wise investment not just for government, but for companies like Shell and BP. Evidence for the former view: Range Fuels, which absorbed both grants and loans before succombing to the perils of scale-up engineering last week. Evidence for the latter would include Mascoma‘s joint venture with Valero Energy to build a 20 million gal per year cellulosic ethanol plant in Michigan. Valero will foot a good portion of the estimated $232 million bill to construct the facility. The crux of the problem, as Cleantech Chemistry and many others have observed (including the National Academies) is that the type of advanced biofuels (i.e. fuel not made from food-like feedstocks such as corn sugar) called cellulosic ethanol has not achieved scale to date. (There are other, more lifecycle concerns, as well). Biofuel Digest editors point out that the larger proportion of advanced biofuels scaling up now are of a different sort- like biodiesel for example. In short, they point out there are multiple roads to get to the same place. The Wall Street Journal, to its credit, does not politicize its arguments – it rightly notes that Range Fuel’s support came from programs created by the Bush administration. Meanwhile, Biofuels Digest points out that the CapEx on the Mascoma plant pencils out to $11 per gal of ethanol for the first phase. The plant may produce up to 80 million gal per year, however, and all the usual promises of cheaper production through scale are supposed to...

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US Cleantech firms in white-knuckle mode

There has been one positive piece of news this week for the cleantech sector – Solazyme is part of a $12 million grant to supply the U.S. Navy with 450,000 gal of biofuel. Solazyme’s algal oil will be used along with used cooking grease to power a fuel plant run by Dynamic Fuels, a joint venture between Tyson Foods and Syntroleum. They’ll be making both renewable jet fuel and marine fuel. Press releases about the deal emphasize that it is the single largest biofuel purchase in government history. Thank goodness cleantech has the government as a customer. Private industry customers haven’t panned out so well lately for battery firms like A123 Systems and Ener1, as reported this week in the Wall Street Journal. Major investments in battery manufacturing – supported in large part from Recovery Act funds – have been met with disappointing demand from electric-car makers. A123 Systems has scaled back its scale-up plans because its big customer, Fisker Automotive, has slowed its own plants due to technical problems. Meanwhile Ener1’s customer Think Global has filed for bankruptcy protection. When C&EN wrote about the battery scale-up, a major concern at the time was that there would be more battery capacity than cars to put them in, and that seems to be the case for now. Back to biotech, according to a Reuters report from Pike Research analyst Mackinnon Lawrence, the biofuels industry is very concerned that budget cutting in Congress will pull the rug out from programs that are helping companies bootstrap their way to cost parity with petroleum. Part of the problem is that industry’s promises to have commercial-scale production on line by this year  have not panned out. Cellulosic ethanol is the biggest disappointment, and so now attention is likely to switch to drop-in biofuels like renewable gasoline and renewable diesel. Or, even better, jet...

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Cleantech Stocks Get Thumbs Up
Aug05

Cleantech Stocks Get Thumbs Up

Given the stock turmoil today and yesterday, recent earnings reports from IPO’d cleantech firms may be flying under the radar for most people. And to call them “earnings” reports is a bit generous, too; they are really “losses” reports, but that is to be expected for early-stage technology firms. Still, its worth noting what analysts are saying about companies like Amyris, Gevo, KiOR, and Solazyme and what the firms reported for the second quarter. While I was mulling a post on just this subject, Jim Lane, over at Biofuels Digest got his post up yesterday covering the first three companies. So I’m giving a hat tip to him and suggesting that you go over there and read his summary. But if the heat and the stock swings have you too worn out to do that, the short take is that though Amyris and Gevo posted results that were not as strong as expected, analysts following the firms are still enthusiastic about the stocks. KiOR will release it’s second quarter results next Thursday. The important pieces that analysts are looking for is whether the companies have a realistic plan for increasing scale (whether they use their own, or other company’s capital to do so). They also want to get a sense of where revenues will come from in the short term, for example, from product sales or off-take agreements from reliable customers. Yesterday, Solazyme reported revenues of $7.4 million, which beat the expectations of analyst Laurence Alexander of Jefferies & Co. He had predicted $6.0 million. Most of the revenues came from R&D funding but the company has begun generating sales of its skin care line, called Algenist, made from an algae-derived tailored oil. Alexander says that the Algenist launch will turn out to be larger than expected, meaning more revenues, and thus, less operating losses, into the future.  In addition, he notes that the company will deliver 283,000 liters of fuel to the U.S. Navy and the contract calls for up to 550,000 liters. He’s put a Buy rating on the stock. Cleantech Chemistry recently posted an interview with Cameron Byers, Solazyme’s senior vice president & general manager of fuels and chemicals about how the company plans to make...

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Algae and Water Energy
Jul22

Algae and Water Energy

Could the energy cost of moving water sink the burgeoning algae industry? C&EN recently checked in with a number of leading algae-growing firms to learn more about their current plans for profiting from the prolific green slime. Though eventually many hope to make money in the large market for biofuels, most firms say that other products like chemicals and high-protein fish food will go first. Building large-scale algae-growing systems is still too expensive to make fuels profitable. The key to bringing down costs is in the engineering of the infrastructure. A recent study by researchers at the University of Texas at Austin looked at the energy costs of moving water into and around algae-growing systems (Environ. Sci. Technol., 2011, 45 (13), pp 5861–5868).Researchers Cynthia Murphy and David Allen presented a startling conclusion: Energy output in the form of algal biodiesel and the total energy content of algal biomass are compared to energy inputs required for water management. The analysis indicates that, for current technologies, energy required for water management alone is approximately seven times greater than energy output in the form of biodiesel and more than double that contained within the entire algal biomass. Seven times greater? Ouch. Like any model, this one began with a host of assumptions. Importantly, the model did not assume that algae farmers would be using fresh water, but did assume algae would be grown in open ponds (except for the inoculation vessels). In fact, the main problem is not the water itself, but the need to move it around from place to place. First water from various sources (saline, fresh, reclaimed from the facility) needs to be obtained and pumped into the inoculation area and the algae pond. More water would be added to compensate for algae removed, evaporation and other “leaks” from the system. Evaporation would concentrate salts in the pond, and may require compensating amounts of fresh water for “blow down.” Cleaning after each growing season would require removing the water and replacing it. In addition, energy would be required to remove water from the harvested algae, and then to return that reclaimed water to the system. The researchers also included in the model the embodied energy of the plastics used to contain the algae in ponds (and the lifespan of the plastics). There is no way, of course, to compare the assumptions in the model to any particular firm’s proprietary growing system. But I did pose the question of water energy to the companies I spoke with that use open ponds. Cellana’s CEO Martin Sabarsky said, “Water is a big issue. It’s an issue for biofuels generally. You have to deal...

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Q&A With Solazyme

C&EN first wrote about leading algae firm Solazyme in 2009. At that time algae firms were gathering up venture capital funding and perfecting their technologies for growing the green slime. Many were targeting biofuels markets, but some firms had additional markets in mind. Solazyme’s algae live in large fermentation tanks and eat sugars, which are transformed into algal oil – a type of vegetable oil. The company went public in late May, and raised $227 million from investors. We checked in with Solazyme to find out more about its business model, and the types of markets it is targeting with its oils. Cameron Byers, senior vice president & general manager of fuels and chemicals gave us a closer look. C&EN: I first spoke with Solazyme back in early 2009 – it seems like forever ago in algae time. Even then, the firm was targeting specialty chemicals, food, and cosmetics in addition to biofuel.  How did that diverse product strategy affect your ability to attract investors and business partners pre-IPO?  Byers: Producing a diverse range of products is not just important, it is what our technology platform was designed to do in-line with our business model. The markets served by conventional oils – petroleum, plants and animal fats – represented an opportunity of over $3.1 trillion in 2010, an attractive potential market for investors. Solazyme’s custom oils can address each of these markets, providing both an environmentally and economically sustainable solution.  As an example, Solazyme recently announced a joint development agreement with The Dow Chemical Company to develop of a new class of algal oils tailored for optimized performance and cost in dielectric insulating fluid applications. Dielectric fluids alone represents a 500 million gallon market. C&EN: Many renewables firms that would otherwise be going after the biofuels market are first looking at chemicals (and some are focusing on chemicals, like Gevo). I know that is also a future-term market for Solazyme. Can you tell me more about why Solazyme’s algae and processes are a good fit for renewable chemicals? Would chemicals commercialization come ahead of fuels? How far ahead? Byers: Petroleum and natural oils have long been the building block for a wide variety of chemicals.  Solazyme is focused on making oil to replace and/or enhance the current sources of oil in multiple market areas.  We are not focused on producing a single molecule product, but instead, we are using our ability to tailor our oils by carbon chain length, saturation and other functional properties to create new oils that are specifically designed for chemical applications and fit into the existing chemical manufacturing infrastructure.  We are creating oils that not...

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Solix Biofuels Raises Money, Changes Name
Mar28

Solix Biofuels Raises Money, Changes Name

Algae-growing firm Solix Biofuels has raised $16 million in a second round of venture capital funding. It has also changed its name to Solix BioSystems “to better reflect its role as a leading provider of algae production systems.” There are many, many firms working hard right this moment trying to make money by growing algae for biofuel. Solix joins at least one other firm – OriginOil – in looking to make money from firms looking to make money with algae. The first two most difficult things about using algae as a feedstock for biofuels is 1) growing algae and 2) growing a lot of algae. But growing some algae isn’t THAT difficult, it’s really just complicated. Solix BioSystems is aiming to solve that problem by marketing a complete system that will get you up and running. The system has a culture capacity of 4000 liters. Which gives the algal entrepreneur a test bed and growth area for one or more of his or her favorate strains. The outdoor arrangement grows algae in large narrow plastic bags suspended in a pool of water, with CO2 bubbles (and sunshine that you supply) to feed the algae. It is interesting to note the additional support structure included to keep the algae growing and content. The support system trailer handles preparation, dosing, harvesting, cleaning… and features  “programmable sparge timing.” I don’t know what the cost would be to scale up this sort of system, but it seems it may be expensive. So, growing algae – check. Scaling up – unknown. The second set of challenges includes separating the oil from the water and the algae. Origin Oil, which makes a very different sort of photobioreactor, has an answer for this one. I can’t explain it, but the video reminds me of a lava lamp and is very groovy. If you would be interested in trying your hand at building a small photobioreactor for algae, InventGeek has the...

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