The costs of an algal hydrogen production facility and its operation are important factors to be considered for practical large-scale applications. Detailed cost analyses must be conducted on minimizing the materials and operating costs as well as optimizing the yield and gas collection. Although there are many reports in the literature about biohydrogen production, only a handful of them deal with economic analyses of biohydrogen production. Critical parameters in the cost analyses include the light environment, the climate and land space, reactor construction materials, the mechanism of culture mixing, reactor maintenance, and long-term operational stability with maximal gas production (Melis, 2002).

Benemann (1997) estimated an initial cost for an indirect algal biophotolysis system consisting of open ponds (140 ha) and photobioreactors (14 ha). The plant was assumed to generate 1.2 million GJ per year at 90% plant capacity, with estimated total capital costs for the system at US$43 million and annual operating costs at US$12 million. Overall total hydrogen production costs were estimated at US$10/GJ. The capital costs were almost 90% of total costs at a 25% annual capital charge (Akkerman et al., 2003). The algal ponds were estimated at a cost of US$6 per square meter (sq m), whereas the photobioreactors, with assumed costs of US$100 per sq m, were the major capital and operating cost factors. The costs of gas handling were not estimated but were presumed a significant cost factor.

An initial cost for a large-scale (>100 ha) single-stage algal or cyanobacterial biophotolysis process in a near-horizontal tubular reactor system was analyzed (Tredici and Zittelli, 1998). The main objective of the analysis was to determine whether the proposed photobioreactor design could meet the cost requirements for hydrogen production through single-stage biophotolysis. The tubular photobioreactor offers superior features for biohydrogen produc­tion due to the internal gas exchange and the effective water-spray cooling. Based on 10% solar energy conversion efficiency, the costs of the tubular photobioreactor were estimated at US$50 per sq m. The analysis did not include costs for gas handling and assumed a rela­tively low annual capital charge at 17%. The capital fixed costs were estimated at 80% of total costs, with the tubular material for the photobioreactor the major cost. The hydrogen produc­tion costs were estimated at US$15/GJ, which are comparable to the costs projected for hydrogen produced in a two-stage process from biomass residues projected at €19/GJ (Tredici and Zittelli, 1998).

An estimated 80 kilograms of hydrogen can be produced commercially per acre of cultivation area per day, assuming that the entire capacity of the photosynthesis of the al­gae could be diverted toward hydrogen production (Melis and Happe, 2001). Based on a realistic 50% capacity, the cost of producing hydrogen comes close to US$2.80 a kilogram. The authors maintained that the biohydrogen thus generated could compete with gasoline at this price, assuming one kilogram of hydrogen is equivalent to a gallon of gasoline. Currently, less than 10% of algae photosynthetic capacity is utilized for biohydrogen production.

A scale-up modular pilot photobioreactor was operated on site over a six-month period for assessment of economic and reactor performance (Melis, 2002). From the distribution among the various cost inventories derived from the field operation, the costs of materials and nu­trients turned out to be the major expenses (84%). A construction cost of US$0.75 per sq m was

established, which was considerably lower than the range of US$20-100 per sq m commonly quoted (Zaborsky, 1998). Although the economic analysis probably reflects a simplified, strip — down, bare design, it does provide an indication of the relative cost of the various components such as materials, nutrients, labor, water use, land lease, power, and others that are necessary and sufficient to assemble a commercially viable photobioreactor. The analysis also indicated that, to substantially lower the cost of the overall operation, effort should be directed toward the recycling and reuse of photobioreactor construction materials and growth nutrients.

These economic analyses indicated that photobiohydrogens could be produced at a cost between US$10 and US$20 per GJ (Akkerman et al., 2003). This is a reasonable maximal cost target for renewable hydrogen fuel, according to Benemann (2000). It should be noted that the economic analyses were based on optimistic assumptions and are highly presumptive and were intended predominantly to ascertain the major cost drivers for photobiological hydro­gen production. At present, biologically produced hydrogen is more costly than other fuel alternatives. Before economic barriers can be meaningfully addressed, many technical and engineering challenges have to be tackled. Nevertheless, these economic analyses provide an indicator that the development of low-cost photobioreactors and the optimization of photosynthetic efficiency are the major R&D challenges.