March 06, 2009
Venture Capitalists Say Algae Biofuels Not Ready Yet
A few big name venture capitalists say they've looked at many algae biomass energy proposals and found them all wanting.
All three said theyíve looked at dozens of algae biofuels plans in recent years; Mr. Khosla says heís looked at more than 100. None have invested a dime so far.
For Mr. Doerr of Kleiner, Perkins, Caufield & Byers, the problem is algae itself. To get better economics, you need to grow the stuff in cheap, open-air ponds, not in fancy bioreactors. But that is rough on algae and limits yields.
Vinod Khosla thinks algae has potential as an energy source. But a way to do it cost effectively hasn't been found yet.
I wonder whether genetic engineering will be needed to make algae biodiesel viable. Anyone have insights on this?
I wonder if algae oil could be mass produced at $160 per barrel. (It would be harder to have it become even lower.) That would be good enough and it would be rationed for important economic activities. At least high oil prices have some positive effects; for instance, it is like a tariff on imported goods.
Bioenergy will come from algae and biomass. Biomass is outpacing algae for now, but long term algae will be in the big money. Biomass is coming on now.
Check out today's (6March) posting at http://www.nextenergyandfuel.com to learn how quickly biomass is starting to catch on.
I believe there is pretty good evidence that the only biomass ethanol that will be produced will be that which is produced from forestry waste product and silvi-cultured fast growing trees like hybrid poplar.Using grasses, most likely raised on arable agricultural land raises the same problems as using corn currently does, (diversion of land from food production, increased fertilizers etc), using corn stover, straw and other agriculture residue would cause major soil degradation problems. One only needs to look at the precarious state of farmland in many parts of Africa, Afghanistan and in Mongolia, where almost crop residue is collected and used as either livestock feed or burnt for fuel.
Forestry waste on the other hand is a true waste material and better still all the specialized trucks and other equipment that facilitates handling it are already out there. All you need to build are the ethanol plants and the technology to break down the cellulose molecule the rest of the needed infrastructure already exists.
Oh, as for genetic engineering of algae, you'll run into serious problems:
1) If you increase photosynthetic efficiency, you'll be creating a strain of algae that may change the trophic base of the entire biosphere if it gets out.
2) If you increase ATP dark phase metabolism at low temperatures, in order to get rid of the cost of covering the desert raceway ponds during night-time temperature drops, you'll be fighting fundamental physical chemistry kinetics at the same time.
Iím glad to see the VCs at least are looking at algae oil economics - as they should be. Weíve raised algae for 35 years commercially and have studied itís fuel potential for the past 3 years. Economically (energy budgets and financial budgets) algae isnít anywhere close to being a realistic fuel alternative. By our numbers - the best algae oil pilot systems are producing algae oil at a cost between 10-20 times more expensive than current petro prices. The definition for viable algae technology given by the VCís is the same one we have used - it has to be competitive with petro - pre tax. Actually, this has been the core problem of algae oil research - the researchers have not looked at the economic sensitivities and have totally focused on proprietary technology gains like genetic engineered strains. What is needed for algae oil to become reality is much better economic process analysis and a focus of those sensitivities by algae researchers. Again, the problem isnít in the growing technologies - itís in the processing/oil extraction technologies. This means no matter how much or efficiently you grow the algae, if you are losing money on the processing - you just lose more money faster. Todayís technologies for processing are just not economically efficient (energy and costs intensive) enough to make algae oil attractive. That said - there are new technologies coming down the pipe that could change the algae game - nano-catalyst might be one - if the numbers can be made to work, but itís too early to tell yet.
As I suggested about 3 items ago, algae could be a source of cellulose, but it will suffer from the wild algae weed problem, even if it is GM to produce lipids.
BTW, I do not see using land as a place to grow algae. The best place would be finding stretchs of ocean that are currently infertile and growing algae there. I could see a fleet of ships fertilizing the ocean and cultivating and harvesting the algae. They could pre-process the algae by pressing out water and fermenting it.
Durwood Dugger writes: Again, the problem isnít in the growing technologies - itís in the processing/oil extraction technologies.
That's a little like saying the problem with mining isn't in the prospecting technologies, its in the refinement technologies.
Your statement is obvious from the simple fact that a vast amount of algae oil is grown naturally every year -- its just that we don't extract the oil from it. It is equally obvious that there is no prospecting problem for gold -- it's in the extraction from low grade ores like seawater.
But as soon as you try to grow algae in economic concentrations, the capital cost of the growing ponds becomes the problem. Yes there are still extraction and refinement problems but they are greatly reduced by appropriate growing environments.
I personally don't see how the overall efficiency works out, especially when we compare to solar energy, which I assume would be able to make use of similar available land.
In terms of energy-to-electricity versus energy-to-starch, solar is already ahead: 10% efficiency for cheapass, $1 per watt solar, up to 30% for fancy concentrator-and-engine solar. Theoretical max for photosynthetic organisms seems to be about 6-7%, and I don't know if anyone has gotten close to that in practice.
OK, you say, 'but algae provide a direct path to a great *store* of energy - oil - whereas solar's output is electricity, and there are further inefficiencies in storing that!'. True, but there are pretty efficient ways of storing the electricity, given enough capital investment (vanadium redox, for example).
Of course, it's possible that we don't care about efficiency - maybe we have a ton of cheap, sunny land, and all we care about is capital costs. Even then, I'm skeptical; you need to supply feedstocks to the algae, and (I assume) extract as much as possible of those chemicals in the refining process so that you can have a fairly closed cycle, except for the hydrocarbons that you get from air/water. You're talking about building a rather complex chemical-processing-and-refining plant, for less per watt than solar, which in turn is not very complex at low efficiencies. The only ray of hope seems to be that there might be some monstrous economies of scale if we cover many acres with algae ponds, but it really seems like a gamble.
A genetically modified algae making the oceans lighter in color would also be helpful, I'd hate to see obama taking someones advice and actually start painting the Black mountains white.
The recent collaboration between Ray Kurzweil and Craig Venter to create an intelligent algae is promising. Teaching algae to think and control its own biofuels production is the best approach. Algae are just as intelligent as most humans, and should be trained to at least perform the menial tasks of extracting their own oil and processing it into fuels.
"Algae are just as intelligent as most humans"
My reaction exactly.
I expect solar photovoltaics to eventually get so cheap that it will make more sense to use electricity from solar to power a chemical plant to synthesize hydrocarbons. The chemical plant approach scales across 12 months of the year. You just use fewer chemical plants per large area of PV during the shorter days than during the longer days.
So maybe biomass energy doesn't make sense in the long term once we have cheap 50% efficient PV.
Vinod Khoshla is the "venture capitalist" who, having invested in ethanol production, then went to Washington to get tax breaks and subsidies to ensure he made money. A real venture *capitalist* would not seek to have tax payer money (or preferences) guarantee his profit.
He is a venture socialist. A very, very rich one but a favor seeker nonetheless.
That said, a venture socialist is at the low end of the spectrum of evil that is socialism.
"th said at March 6, 2009 05:26 PM:
A genetically modified algae making the oceans lighter in color would also be helpful,"
Yeah, if the world was getting warmer. And, if we knew that was a bad thing.
Actually he is a venture monopolist.
He used to be an entrepreneur (co-founded Sun Microsystems).
Then, a venture capitalist
Now, a venture monopolist
We are putting together a plan for millions of acres of algae ponds from Florida to East Texas. The algae would be grown, harvested continuosly, and fed to anaerobic digesters to produce CNG and LNG. This can be a low cost (20 cents per pound of algae) solution using the abundant natural resources of the southeast, yielding up to 2,500 gallons of LNG per acre per year.
Forget algae biofuel. It is not going to happen for $30 a barrel, and the water requirements will be an environmental regulatory nightmare.
The place to invest basic research is in Gliocladium roseum. a fungus found in the temperate (cool) rainforest of Patagonia.
Gliocladium roseum fungus is a major breakthrough discovery, because it can both break down cellulose and directly synthesize diesel fuel.
This fungus naturally makes a mix of hydrocarbons that bears a striking resemblance to diesel. Gliocladium roseum grows on cellulose, one of the most plentiful (and wasted) waste products on earth.
Gary Strobel, Montana State University professor and lead author of a paper in Microbiology announcing the discovery: "When we looked at the gas analysis, I was flabbergasted. We were looking at the essence of diesel fuel."
I met with Ron Putt last week. I think he has a very elegant and straight forward strategy and design for the growth of naturally occurring native species of algae in open raceways located throughout the southeast, along with a low cost method for harvesting the algae and processing the biomass in anaerobic digesters to produce LNG/CNG, which is being increasingly used to power fleets of vehicles (see press releases about ATT's conversion of 8K vehicles: http://gas2.org/2009/03/11/att-to-spend-565-million-on-compressed-natural-gas-vehicles-hybrids-next-10-years/). It is possible that Mr. Doer and Mr. Khosla have focused to much on ventures in the southwest U.S. that involve GM algae rather than the type of approach of Mr. Putt's that is relatively simple and can be developed right now with off-the-shelf technologies along with some very innovative process design modifications over existing approaches.