Algae Biodiesel Cost - What Exactly Makes Algae Fuel Costly?

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Whether it is the person who I meet at a conference, or folks who interact at Oilgae blog, or people who write to me, the one big question they always ask is, "How much does it cost to make fuel from algae?"

Now, I am not going to say I have precise answers, but based on cost estimates of various components as well as based on what other experts and companies have mentioned, I think it is fairly obvious that it is very difficult to have the final fuel cost to be anything less than 7-8 $ per gallon is one uses photobioreactors.

I'd reckon the two main significant cost components of algae fuel are photobioreactors (capex and also its depreciated value in the annual expenditure) and cost of harvesting (my estimates run from anywhere between 0.25 - 1 $ per gallon based on what methods one uses, including capex depreciation). Of these the photobioreactors appear to be the really scary cost component, with current estimates running at about 75-100$ per 100 m2. At that rate, taking a 10% depreciation annually alone would make the depreciated cost of PBRs equal to almost 3-4 $ / gallon of algae fuel produced.

The other two cost components - extraction and transesterification - appear to be fairly reasonable and are comparable to the costs for any other biomass - less than 50 cents per gallon, together.

Based on the above, I'd agree with what some experts have said - closed systems, especially photobioreactors, are simply unlikely to make the cut in future unless someone can bring down their costs by 60-80%. Now that's asking for something really sttep.

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