Micro-crops of algae grown in man-made open-air ponds.
(Credit: PetroAlgae)PetroAlgae has signed a memorandum of understanding to license its proprietary technology for producing and harvesting algae for fuel to Indian Oil, the company announced this week.
The Melbourne, Fla.-based company has developed bioreactors and harvesting methods for converting algae grown in open-pond freshwater farms into biodiesel.
The first phase of its partnership with Indian Oil will involve building a test facility to see whether PetroAlgae's production method is scalable. Once that has proven to be successful, Indian Oil plans to build a commercial production facility that could produce 200,000 tpa (tonnes per annum) of biodiesel. That facility would also produce a protein byproduct from the process that could be sold for use in making animal feedstock.
The Indian Oil-PetroAlgae deal lends further support to the notion that India's ambition is to rival Brazil as the world's largest exporter of biofuel in the coming years. Global biofuel use is expected to double by 2015, according to a recent report by Hart Energy Consulting, and many Big Oil players have been focusing efforts on getting a footing in that arena.
Until recently, most of the Big Oil interest in algae biofuel has been in the form of investments thrown at pilot projects, start-up companies, and research institutions. But the past few months have seen prominent partnerships with more clearly laid-out commercial ambitions.
In July it was announced that Exxon Mobil is investing over $600 million to produce biofuel made from photosynthetic algae in conjunction with the Calif.-based biotech firm Synthetic Genomics (SGI). Martek Bioscience, which initially was selling its fermented algae as a baby food additive, announced in August that it had signed a deal with BP on microbial biodiesel production from algae fermentation.
While algae start-ups seem to have weathered the economic investment drought, as PetroAlgae's own board head John Scott predicted in May, it remains to be seen which method for growing algae will win out.
There is an ongoing debate over whether it's more cost-effective to grow algae by fermentation or photosynthesis. The PetroAlgae deal with Indian Oil puts another mark in the photosynthesis column.
The demise of algae biofuels start-up GreenFuel Technologies sent a chill down the spine of many fellow entrepreneurs and investors this week, but the chairman of PetroAlgae will have none of it.
John Scott, who heads the board of the Florida-based algae fuel company, sent a letter on Thursday to PetroAlgae shareholders (click for PDF), saying that the public company now has a market capitalization of $835 million and has signed on a customer. GTB Power will use PetroAlgae's algae-growing equipment at 10 facilities in China and Taiwan, and PetroAlgae expects to sign other licensing deals this year.
Like many algae advocates, Scott argues that algae is more promising than soy or corn because it can grow in different environments and can yield products other than fuel. He predicts that PetroAlgae will be the first company to commercially produce algae biofuel.
The corporate update follows the disclosure on Wednesday that GreenFuel, a pioneer in algae technologies, had run out of money and was seeking to sell its assets. It's estimated that there are now more than 50 algae biofuel companies, many of which were started in the past three years
PetroAlgae's algae-growing test facility in Florida.
(Credit: PetroAlgae)GreenFuel's demise has some people nervously asking what it might mean for other businesses in green tech, which often require a lot of capital to scale.
Investor Rob Day predicts that there is "a lot of bad news yet to be seen in cleantech venture capital." Many start-up companies raised a lot of money at high valuations but are having trouble getting follow-up financing because of the economic downturn, he said.
GreenFuel investor Duncan McIntyre of Polaris Ventures Partners called the company a "victim of the economy."
Others suggest that management missteps may have more to do with GreenFuel's problems than the economic downturn.
"GreenFuels' demise (is) a cautionary tale for cleantech companies who put hype over business fundamentals," Willie Brent, senior vice president in public relations firm Weber Shandwick's clean-tech unit, declared on Twitter.
A few other algae companies took the opportunity this week to tell me that developing technology and building facilities--in this case, algae farms--is not necessarily the best route to commercial success.
Some companies, such as Texas Clean Fuels, intend to sell equipment. And engineering company CH2M Hill is looking at growing algae in conjunction with wastewater treatment, which a company technologist calls a more "practical" approach to growing algae-based biofuel.
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