A financial assessment of two alternative cultivation systems and their contributions to algae biofuel economic viability

TLDR

The study uses the Farm‑level Algae Risk Model to assess the economic feasibility of two algae farms—an open raceway pond and a photobioreactor—over a 10‑year horizon. The model simulates production, pricing, and financial risks for each system, incorporating current technology, biomass yield, lipid content, culture crashes, and dewatering/extraction costs. The analysis shows neither system is likely to be economically viable at current prices, with ORP costing $109/gal (±$45) and PBR $77/gal (±$25), and a 1% biomass increase raising net cash income by only 0.21% for ORP and 0.10% for PBR.

Abstract

The Farm-level Algae Risk Model (FARM) is used to simulate the economic feasibility and probabilistic cost of biomass and bio-crude oil production for two projected algae farms. The two farms differ in their cultivation system: an open raceway pond (ORP) and a photobioreactor (PBR). The economic analysis incorporates production, price, and financial risks the farms will likely face over a 10-year period. Current technology for both cultivation systems is assumed with an emphasis on the differences in biomass production, lipid content, culture crashes, and dewatering and extraction costs. Results of the analysis indicated that with current prices and technology neither cultivation system offers a reasonable probability of economic success. The total costs of production for crude bio-oil is 109 $ gal− 1 ± 45 x¯σ for an ORP and 77 gal− 1 ± 25 x¯σ for a PBR. Further analysis revealed that for every 1% increase in biomass production annual net cash income is increased 0.21% for an ORP and 0.10% for a PBR.