Due to the significant potential of microalgae as a feedstock for biofuels, numerous economic viability assessments have been undertaken (Ribeiro and Silva 2013). To provide a snapshot of the current status of biofuel production from microalgae, a summary of these studies is provided in Table 17.3.

17.3.1 Techno-Economic Model Discussion

The summary in Table 17.3 demonstrates that there is a wide range of cost esti­mates for microalgae biofuel production and that none of them provide a cost estimate that will be economically competitive with current biofuels or fossil fuels (minimum selling prices of cost of production do not include fuel taxes). Further analysis of the studies is provided in the paragraphs below.

The work of Chisti (2007) was released during a time of aggressive investment and development into microalgae biofuels when oil prices were at historical highs. As a result, this work has a number of assumptions that are optimistic, and inter­estingly, the only analysis that demonstrates that PBR is better than open ponds. The major driver for this discrepancy is the extremely optimistic aerial productivity for PBR (3 times maximum recorded long-term annual averages) and the low

Description	System	Aerial Productivity	Cost (US$/L)	Reference
Biodiesel production cost from algae grown in PBR and open pond	PBR —> Centrifuge —> Extract —> Transesterification —> Anaerobic digestion Open pond —> Centrifuge —> Extract —> Transesterification —> Anaerobic digestion	72 g/m2/d 35 g/m2/d	$1.34—$2.94 $3.21	Chisti (2007)
Examination of microalgae cultivation using raceways, PBR and fermentation in British Colombia, Canada	Open raceway PBR Fermenter (heterotrophic) After growth stage downstream processing is: Centrifuge —> Solvent recovery —> Transesterification	9.4—22.9 g/m2/d 15.3 g/ur/d 50-100 g/L	$2.65-$ 14.44 $5.87-$24.60 $0.88-$2.58	Alabi et al. (2009)
Development of algal biomass production model and economic model	PBR inoculation and Open ponds —> Centrifuge —> Unclear anaerobic digestion	18-37 g/m2/day	$1.03-$3.98a	Williams and Laurens (2010)
Estimated likely cost range for biodiesel production from microalgae considering a range of technologies	Multiple scenarios of equipment options		$2.17-$9.92b	Delrue et al. (2012)
US Department of Energy harmonised baseline model for renewable diesel from microalgae	Open ponds Settling —> Dissolved Air Flotation —> Centrifuge —> Wet solvent extraction —> Hydrotreating —> Anaerobic digestion	13.2-19.1 g/m2/ day	$3.04-$4.90	ANL et al. (2012)

Table 17.3 Techno-economic studies on biofuels from microalgae (all measurements are in US$/L in the respective referenced year)

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354 K. de Boer and P. A.

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capital cost. The major concern with this work is that demonstrable operational issues (such as cleaning and contamination) were treated as trivial matters. Despite these weaknesses and overly positive assumptions, this study shows how chal­lenging the economic production is as it still demonstrates non-competitive pro­duction costs.

The work of Alabi (2009) provides a comprehensive evaluation of microalgae produced phototrophically in open ponds and PBR as well as heterotrophically in fermenters in a Canadian context. This study utilised realistic capital costs and operating data from industry and long-term research studies. The high boundary for fuel costs was due to low productivity (low solar irradiation in Canada and no production in winter), high capital costs (lined ponds) and low oil content (15 %). The low boundary for fuel costs occurred at high productivity (high solar irradia­tion), low capital costs (no pond lining) and higher oil content (30 %). Hetero­trophic solutions were deemed to be unsustainable due to the need for an organic feedstock which is typically derived from terrestrial crops and therefore not suitable for mass production.

The potential of EPA (Omega 3) to provide an economically viable solution was also investigated. This demonstrated that at optimistic conditions, microalgae could economically be grown for the purpose of EPA production; however, in these cases, biofuels were a minor by-product. Although a viable option and currently being pursued by commercial companies (Cellena and Aurora), there are concerns over market saturation at biofuel production levels (Benemann et al. 2012).

Williams and Laurens (2010) developed a model for algal biomass production from first principles that utilised solar irradiation levels and typical lipid/protein/ carbohydrate ratios to predict biomass productivity. Although this model provides indications of upper limits of aerial productivity, the economic assessment is somewhat optimistic due to the following assumptions:

• Unproven high productivities (annual average)

• Optimistic and unproven harvesting costs

• High protein prices especially considering there is no market for algae protein

• 100 % nutrient recycle from anaerobic digestion and dewatering operations

Unlike other studies, Delrue et al. (2012) used an innovative approach to address the high level of uncertainty in regard to the use of different technologies on the overall economics of microalgae biofuels. In this work, Monte Carlo simulation techniques were used to generate thousands of different scenarios based on different technologies and performance levels. Table 17.4 summarises the output of this simulation with each row representing a scenario in which one technology was kept constant and all the others changed. The minimum and maximum costs represent the lower and upper limits of the confidence level or range of the estimates, with a 50 % probability that the ultimate cost of biofuels with this technology choice will lie in between these boundaries.

Scenario	Lower	Upper
All technologies	3.67	6.97

Table 17.4 Unit biofuel cost using different technologies (US$/L) (Delrue et al. 2012)

Growth technologies Open pond 2.17 4.22 Photo-bioreactor 3.82 7.23

Harvesting/drying technology Centrifuge 3.45 5.93 Belt filter press 3.40 5.82 Solar drying 6.13 9.92 Bed drying 3.28 5.60

Extraction technology n-hexane 3.83 6.95 Dimethyl ether 3.65 6.97

Conversion technology Transesterification 3.75 7.00 Hydrotreating 3.63 6.88

Energy and nutrient cycle Anaerobic digestion 3.65 6.88 Gasification 3.75 7.07

The ‘all technologies’ scenario represents the overall projected price range of biofuels based on all available technologies. As an observation, these values are considered optimistic as the study assumed the flue gas could be utilised as the carbon source and wastewater would provide a source of nutrients (N and P). Unfortunately, there are very few locations that have ideal growth conditions, that is high solar irradiance and stable temperatures, large plots of low-cost non-arable land, access to waste water and close proximity to high volume and concentrated sources of CO2 (Benemann et al. 2012; Lundquist et al. 2010). This work again indicates that biofuels from microalgae are unlikely to be viable at the current levels of productivity with the current technologies.

In an attempt to develop a baseline model for techno-economic assessment, lifecycle assessment (LCA) and resource assessment of microalgae to biofuel processes, the Department of Energy (DOE) worked with the three American national laboratories to develop a harmonised model of renewable diesel production from microalgae (ANL et al. 2012). This is an extensive work that builds upon the modelling and research of multiple groups and industry representatives over a 50- year period. The fundamental data in this model are used as a reference for most other studies including those referenced in the bottom two rows of Table 17.3. The process modelled is shown in the block diagram in Fig. 17.3.

The model was built around multiple 4850 ha sites located in areas with suitable climate and water availability to achieve a total production volume of 5 billion gallons/year. The sites were chosen according to previous geographic information service (GIS)-based resource assessment modelling. The comprehensive nature of

this work provides an excellent insight into the major factors affecting the eco­nomics of large-scale biofuel production from microalgae. Key observations are as follows:

• At the baseline yield (annual average of 13.2 g/m2/day productivity and 25 % lipid content), capital costs represent over 70 % of the final diesel selling price. Due to the high capital burden, the break-even price of diesel production is $2.46/L, while the selling price to achieve a 10 % rate of return on capital investment is $4.90/L (All further costs mentioned per below are based on a 10 % rate of capital return).

• The addition of pond liners significantly increases the capital cost and therefore the unit cost of renewable diesel production, and at the baseline yield, the price is increased by $1.38/L. Alternative pond design or suitable ground would negate the need for pond liners, significantly reducing the capital cost.

• Higher yields (e. g. the baseline uses an annual average of 13.2 g/m2/day pro­ductivity and 25 % lipid content) significantly reduce cost to ($3.03/L) as the pond area, and therefore, capital investment significantly reduces. At lower yields (<20 g/m2/day), pond and liner costs dominate the capital expenditure; however, at higher yields, the other system elements have a much more significant effect.

• In a best case scenario with harvesting/extraction costs halved (due to tech­nology advancement), pond installation costs reduced by 30 % (due to opti­mised construction approach), and with the removal of liners, the selling price was approximately $2.50/L less at the low yield of 12.5 g/m2/day. If the yields were increased to 50 g/m2/day via strain improvement (selection or genetic modification), then prices would further decrease to <$1.25/L. However, at increasing yields, the capital costs of the non-growth elements and the operating costs start to dominate the cost.

• Selling the spent algal biomass as fish protein ($350/tonne) had a limited effect on the economic analysis as this was approximately equivalent to the value provided by the AD plant. To have a greater effect, the selling price of the protein would need to be in excess of $350/tonne.

As an observation, the break-even cost of production in the base case scenario of this model was $2.46/L, while under the same conditions, the minimum selling price was $4.90/L. This increase is required to deliver a rate of return on equity of 10 % (IRR). A key high-level observation from this study is that the capital cost of the growth system is the major impediment to cost competitive microalgae-based biofuels. At low productivities (<20 g/m2/day), the growth system dominates the capital expenditure, especially when liners are required. In some situations, liners can be done away with (typically resulting in a halving of pond construction cost); however, there is little opportunity to reduce the cost of pond construction due to earthmoving being a very developed field. The most effective way to reduce capital expenditure is to increase the productivity of the microalgae so that less pond area is required, from the studies considered in this work 30 g/m2/day seems to be a minimum for competitiveness. Higher yields can only come through optimisation of growth conditions, selective breeding and ultimately from genetic modification to limit photo-inhibition.

The work of Klein-Marcuschamer et al. (2013) evaluated three different paths to biomass-derived jet fuel, including microalgae, perennial oil crop and heterotrophic fermentation. Their techno-economic analysis focused on algae and processes that had sufficient data available. The major anomaly with this work is the use of centrifuges to concentrate the microalgae from harvest concentration (0.05 % ash free dry weight) to 25 %. Their motivation for this is that this has been demon­strated through the use of Evodos centrifuges. The consequence of this is that harvesting capital and operating costs (power) represent 70 % of the final cost.

This is clearly not going to be viable, with options such as settling or DAF (with or without flocculation) required as a pre-settling stage. Interestingly, however, this demonstrates another challenge associated with large-scale microalgae production— low-cost options exist; however, they are often problematic or not proven at scale.

As microalgae research and commercial R&D projects have matured, the US Department of Energy (DOE) has identified two production pathways as shown in the final row of Table 17.3[5]. In the ALU methodology, the microalgae production system is treated as a biorefinery with the microalgae constituents (lipids, carbo­hydrates and protein) being converted into green diesel, ethanol and animal feed or AD feedstock, respectively. In the latter, the whole microalgae biomass is converted to green crude via hydrothermal liquefaction. The high costs in Table 17.3 indicate the current state of the art, while the lower cost represents the proposed achievable future cost. The major savings are associated with greater yield (30 g/m2/day), no plastic liners, dewatering costs halved and high efficiencies in all processing operations.