5 Comments

Summary:

Investors are still pumping money into algae fuel, despite the lack of commercial availability of the green gas. This morning seven-year-old Solazyme announced that it has raised $52 million in a Series D financing from investors including Chevron Technology Ventures.

Investors are still pumping money into algae fuel, despite the lack of commercial availability of the green gas. This morning, seven-year-old Solazyme announced that it has raised $52 million in Series D financing from investors including Braemer Energy Ventures, Morgan Stanley, and Chevron Technology Ventures, the VC arm of the oil giant. Including this round, Solazyme has now raised over $125 million.

Solazyme’s funding news comes on the heels of Exxon and Synthetic Genomics — geneticist guru Craig Venter’s algae fuel company — officially opening up their algae test facility at Synthetic Genomic’s HQ in La Jolla, Calif. Exxon and Synthetic Genomics have a $600 million development deal to use genetic engineering to develop productive strains of algae that can be turned into biofuels.

Another well-funded algae fuel company is Sapphire Energy, which has raised more than $100 million from the likes of Bill Gates’ investment firm Cascade Investment, as well as ARCH Venture Partners, Wellcome Trust and Venrock. Sapphire says it will make 1 million gallons of algae-based diesel and jet fuel per year by 2011 and 100 million gallons per year by 2018.

Solazyme, based in South San Francisco, engineers efficient algal strains, grows its designer algae in fermentation tanks without sunlight by feeding it sugar, and uses existing industrial equipment to extract the oil. The company is looking to commercialize its technology in the 2012-2013 time frame, with a production cost target at $60 to $80 per barrel, Solazyme CEO Jonathan Wolfson told me last year in an interview at their labs.

In the announcement today, Wolfson emphasized that the company is on a “rapid path to commercialization,” and this funding is supposed to help the company get there. The issue for all of the algae fuel players is that it requires so much capital to build a commercial scale algae plant, on the scale of “over $100 million,” Wolfson told me last year. And like with Synthetic Genomic’s deal with Exxon, Solazyme will likely commercialize its technology with an oil partner (as a strategic investor Chevron would be a safe bet).

If these algae fuel companies aren’t able to reach commercialization, as Craig Venter put it once: they;re “just playing” and “wasting investors’ money.” Basically, the algae companies need to be able to reach the scale at which the oil companies currently operate to be competitive. There are a lot of skeptics who think algae fuel won’t be able to reach that scale economically.

At the end of the day, the overall carbon emissions reductions we could get by swapping out gasoline for algae fuels totally depends on the algae fuel production process. Algae absorbs CO2 as it grows, and this CO2 can come from, say, power plant emissions, thus providing a productive way of recycling the carbon emissions. But when algae fuel is burned in an engine, guess what? The carbon dioxide is released. If an efficient process is worked out, the process could be carbon-neutral, but it will entirely depend on how efficient the production process is.

For more research on cleantech financing check out GigaOM Pro (subscription required):

Cleantech Financing Trends: 2010 & Beyond

You’re subscribed! If you like, you can update your settings

  1. David Schechter Monday, August 9, 2010

    why not focus on solar thermal concentrators and utilize the algae biofuel to help replace the enormous amounts of water required to make steam to generate electricity? Not to mention the fact that biofuel will still have to compete with alternative energies from an economic feasibility standpoint.

    1. Solar & wind are pipe dreams. The wind don’t always blow, the sun don’t always shine. They’d be fine on a small scale, but they’ll never replace oil. Never. Biofuel will.

      Ethanol uses more gas to make & deliver than it replaces & doesn’t produce the power gasoline does, so that’s a ridiculous waste. We need to stop subsidizing that insanity.

      Algae can be mass produced very cheaply, has the octane we need to run our machines & the by-product is cattle feed. The price point is about the same as we currently pay for oil. When production gets ramped up, that will come down.

      All of that without covering 2/3 of the face of the earth with mirrors & obnoxious windmills.

  2. support the upstairs said

  3. Corporate Investors Open Wallets for Greentech Wednesday, August 11, 2010

    [...] in technologies that can save energy and reduce greenhouse gas emissions. Earlier this week, Chevron contributed to a $52 million round for Solazyme, which aims to make fuel from algae. Last week, General Motors announced its [...]

  4. What Shell’s Brazilian Biofuel Megadeal Means for Codexis Wednesday, August 25, 2010

    [...] candidate Amyris has a partnership with French oil giant Total; Chevron has invested in LS9 and Solazyme as well as in Codexis; and Exxon is in a $600 million partnership with Craig Venter’s Synthetic [...]

Comments have been disabled for this post