“It’s the co-products, stupid.� -- Riggs Eckelberry of OriginOil A wave of algae biodiesel firms and and an accompanying amount of hype have surfaced recently.  Some firms are making outlandish claims about the volume of algae they can produce from an acre of land.  They'll be hoisted with their own petard soon enough. There are many pieces to the algae puzzle that seem like afterthoughts, but are actually crucial to the economics -- co-products, nutrients, harvesting, drying, and conversion technology. System design and algae strain (which seem to be the focus of most discussions) are important, but not the only components. Co-generation, co-location, and co-products are a critical aspect to an economically scalable and sustainable business model. Algae producers must look for synergies with other industries and products and provide higher value services, food and chemicals, and then transition to fuel. High-Value Co-Products Fertilizers Animal Feeds -- Lipinated algae meal for animal feed High-Value Foods and Food Ingredients Nutraceuticals ($20,000 per ton versus fuels at $100 per ton) Bio-Plastics High-Value Services Biomass/Process Waste Heat for Generating Electricity CO2 Mitigation Wastewater Mitigation

The diagram here shows the potential inputs and outputs of an algae farm (from Proteus).

XL Renewables’ business plan might serve as the model for the nascent algae fuel market.  The company co-locates algae production near a dairy farm and a biorefinery, using algal co-products to supplement livestock feed and using dairy waste products and algal biomass to feed the power plant. Algae farmers will best be served by siting near a waste water facility or other synergistic partner According to an algae investor and entrepreneur colleague, “It's not about the oil for algae, it's about the carcasses of algae. The oil is the leftovers.  Margins on JP4 from algae oil could be $0.25 on $2.25. But all those bodies from the dead little algae to make the oil is worth $1,000/ton with a cost of $600.�

• This is a small excerpt from the April issue of the Greentech Innovations Report which dives deep into the algae pond.  You can subscribe to it here.