Algal biofuel technology is currently still in an early stage of development and therefore economically unfavorable for scaling-up purposes. Thus, analyzing the detailed economic breakdown of the multistage processing of algal biofuels will certainly open up a new direc­tion in identifying, evaluating, and verifying the actual problems that result in the high pro­duction cost of algal biofuels. A detailed discussion of the economic breakdown follows:

• Capital cost. The capital cost is the main cost driver in the entire system boundary of algal biofuels. A study performed by Davis et al. (2011) revealed that the capital cost of algae cultivated in an open pond and in a closed photobioreactor contributed approximately 91.0% and 94.7% of the total production costs, respectively. The total capital cost for algae cultivated in a closed photobioreactor was 153.8% higher than an open pond system, indicating the high investment risk in scaling up a closed photobioreactor for algal biomass production. Furthermore, the closed photobioreactor manufacturing cost contributes a large portion to the total capital cost at 52.7%, or 12.7 times higher than the open pond manufacturing cost. A similar result was also reported by Acien et al. (2012); in an actual algal biomass production plant, the capital cost contributed 87.2% of the total production cost, whereas 34% of the total capital cost was utilized to purchase equipment such as closed photobioreactors, a freeze dryer, and

a decanter (Acien et al., 2012). The closed photobioreactor manufacturing cost was lower compared to the study by Davis et al. (2011), which accounted only 16.1% of the total capital cost, but if other associated expenses such as installation costs, instrumentation and control, piping, engineering, and supervision were included, the cost to set up the closed photobioreactor cultivation system would reach up to 45% of the total capital cost. Based on the data presented, reduction of the associated equipment cost for algal cultivation systems by simplifying the overall designs and materials used, but allowing high productivity of algal biomass, is deemed necessary.

• Operating cost. The total operating cost for algal biomass production cultivated in a closed photobioreactor was dominated by labor cost (88.3%), followed by power consumption and water cost (9.2%), and finally nutrient and CO2 cost (2.5%) (Acien et al., 2012). In this regard, it is obvious that reducing the amount of labor (e. g., one worker/hectare or less) could significantly help reduce the overall operating cost. Reducing the amount of labor can be accomplished by introducing extensive automation into the entire algal biomass production plant, from cultivation farm to final biofuel production process (Acien et al., 2012). On the contrary, the raceway pond required 32.7% lower operating costs than the closed photobioreactor (Davis et al., 2011), primarily due to the ease of operating the open pond system and, hence, less power consumption. The high power consumption in the closed photobioreactor cultivation system (usually referred as an airlift tubular photobioreactor) is caused primarily by the use of heavy-duty pumps to circulate and to provide sufficient mixing of the algae (Lam and Lee, 2012). Hence, extensive research efforts to design an innovative closed photobioreactor with less power consumption that has the potential

to be easily scaled up are necessary to move the algal biofuels industry to the next level. Water consumption cost is another important issue that should not be ignored. Although the total water cost is lower compared to the power consumption cost, incessant waste of water could cause an enormous water footprint in algal biofuel

production and lead to irreversible consequences for regional water resources (Subhadra, 2011). Several precautionary steps should be taken because the evaporation rate for the open pond system is exceptionally high (~0.3 cm/day), resulting in a massive waste of water in this cultivation system. The water consumed in the open pond system was approximately 3.3-6.7 times higher than in the photobioreactor (Davis et al., 2011; Delrue et al., 2012), where continuously pumping fresh water into the system could inevitably increase the overall operating cost, especially for long-term operation.

Coproducts. Valuable coproducts such as carbohydrates and proteins remain in the algal biomass after lipid extraction. These products could be further utilized to increase the revenue of algal biomass. Unfortunately, in some recent techno-economic studies, the coproducts did not bring a significant return to reduce the production cost of algal biofuels (Davis et al., 2011; Sun et al., 2011). For example, when biogas production facilities (e. g., using residue of algal biomass for biomethane production) was incorporated into the algal biodiesel production plant, the total coproduct sales revenue could reduce the operating cost by only 12.7-18.2% (Davis et al., 2011). However, the contributions from coproducts, especially those that have higher economic value, such as bio-butanol, should not be totally ignored, because the process for producing them could be further improved in the near future as technology develops (Davis et al., 2011).

12.5 CONCLUSION

Cultivating algae as a sustainable source of biomass for biofuel production illustrates a new trend in the renewable energy industries. The advantages and promises of algal biofuels are alleged to bring a revolutionary breakthrough in balancing the global fuel demand with better environmental protection. However, producing algal biofuels requires a large cultiva­tion system and substantial energy requirements, which subsequently induce a negative im­pact in commercializing these renewable fuels. Several technical challenges, such as cultivation method, harvesting and drying processes, and biofuels conversion technologies using algal biomass, are still in the infancy phase, and extensive ventures in research and de­velopment are urgently needed to address the commercial feasibility of this renewable energy source. From the techno-economic point of view, algal biofuels are currently considerably more expensive than fossil fuels; thus political support is desirable to strengthen the eco­nomic viability of algal biofuels and to be able to compete in the global fuel market. Sustained support from technology developers, politicians, and policymakers, as well as acceptance from the public, are the driving forces to materialize this commercially viable biofuel source as a solution to future energy concerns.

Acknowledgment

The authors would like to acknowledge the funding given by the Universiti Sains Malaysia (Research University Grant No.814146, Postgraduate Research Grant Scheme No. 8044031, and USM Vice-Chancellor’s Award) for the preparation of this chapter.