The bio-based materials and chemicals industry needs to tap newer, non-food sources of biomass and cellulosic material and raise volumes of feedstock before it can emerge as an economically viable alternative to petroleum-based products, according to a new Lux Research report (Client registration required). The report models cost drivers in gasification, enzymatic hydrolysis of cellulosics, and algae cultivation to find opportunities where new technologies can turn them to profit.
As this week’s graphic shows, Lux Research’s cost model indicates that algae cultivation remains a cost-intensive loser, yielding a 48% loss overall and calling into question its long-term prospects. The problem lies in the high capital costs for growing algae at industrial scale, which amount to $202,000 per hectare.
This is because:
- Costs exceed $412 per day, adding up to $150,732 annually. The material and energy cost of the three phases – Feedstock (field to biomass), Conversion (biomass to intermediate), and Production (intermediate to product) – impose daily costs of $81, $37, and $18 respectively. On top of daily capital costs ($68/day) and labor ($207/day) per hectare per day, algae cultivation becomes an expensive proposition.
- Revenues only total $279 per day, or $101,834 annually. Tallying up the products in Lux Research’s model, a hectare of algae brings in $279. Contributing to that total is $260 for 86.6 gallons of Fatty Acid Methyl Esters (FAME) at a generous $3.00 per kilogram (kg), $4.53 for 9 kg of glycerine at $0.50/kg, $4.03 for 4 kg of alcohol at $1.00/kg, $0.91 for 1 kg of fertilizer (P, N) at $0.90/kg, and $9.87 for 99 kg of coproducts at $0.10/kg for soil amendments or feed cake.
Source: Lux Research report “Pruning the Cost of Bio-Based Materials and Chemicals.”