One dozen algal biofuels companies, three strategies, will reach commercial scale: Thurmond
Digest columnist and Algae 2020 author Will Thurmond
In Texas, Digest columnist Will Thurmond released Algae 2020, Vol. 2 highlighting why some algae companies will be winners and some will be losers bringing their product from pilot to commercial scale from 2011-2020. The report concluded that less than one dozen algae production companies will graduate into pre-commercial, deployment-stage algae ventures using pond, photo-bioreactor and fermentation based production systems.
The study found three key strategies that determine which companies will attract capital and scale up their enterprises while others will be perpetually stuck in the laboratory or garage, many never even scaling up to small, test-pilot phase: strategy #1, “algae long-term winners focus on drop-in fuels and biofuels”; strategy #2, “algae short-term winners target diversified markets”; strategy #3, “algae winners bring together R&D labs, universities and public-private partnerships.”
The study is based on interviews with 200 CEOs and key researchers from algae related companies in person including universities, research labs, public-private partnerships, collaboratives, and large companies and 30 in-person algae site visits.
Strategy #1: Algae Long-Term Winners Focus on Drop-In Fuels and Biofuels.
There are about a dozen leading algae companies that have successfully progressed into pilot and demonstration scale projects. Why? In addition to being able to produce either ethanol or biodiesel, these organizations are also able to produce drop-in replacement fuels like biojet and renewable diesel that are in high demand today by various industries including oil and gas, aviation, petrochemical, and the U.S. military.
“The current winners are focusing on diversifying their fuels beyond just algae for biodiesel,” said Thurmond. “They’re focusing on algae for ethanol, and algae for drop-in replacement fuels like renewable diesel, biojet fuel, and biobutanol for early stage commercial and defense customers. This is what the market demands. These are what the companies are gearing up to produce at scale. It is not an R&D technology push strategy. If you’re simply pushing a technology you are most likely to fail. The winners focus on a market pull or demand-based strategy.”
Strategy #2 Algae Short-Term Winners Target Diversified Markets.
Algae 2020 discovered that most winning algae producers are diversifying their short-term focus on high-value products including: omega 3s, health products, cosmetic, pharmaceutical, and specialty chemical uses, and some mid-value markets like livestock and fish meal, renewable chemicals. This allows a company to bring in revenue to pay the bills and establish brand identity while scaling up their operations over time to commercial scale biofuel production. “I’ve concluded this is a short-term and short-sighted strategy, since most of the “higher value” markets are small in size, limited in competition, and will be quickly saturated by the long-term players as they reach economies of scale for biofuels production,” said Thurmond. “There are a few exceptions in higher and mid-value value products which I’ve revealed in the Algae 2020 study that will find long-term success.”
Strategy # 3 Algae Winners Bring Together R&D Labs, Universities and Public-Private Partnerships.
The third key finding from Algae 2020 study: among R&D and start-up related algae projects, the winners attracting government grants, funds, or private funds share the following in common. These winners bring together “collaborative clusters” of research labs, industry, government, academia, cleantech investors, and producers to share and collaborate on key technology challenges and market demand-based opportunities.
Category: Fuels
