While firms such as DSM have proven there’s money to be made from high-value algae ingredients such as omega-3s, the field is littered with the corpses of startups that have tried—and failed—to make a buck out of algae biofuels and bulk proteins. So what makes Algenie—an Australian startup now emerging from stealth—think it can crack the code?
It’s early days, but novel thin layer photobioreactors enabling dramatic improvements in efficiency and scalability could change the game, claims cofounder and CEO Nick Hazell, a former PepsiCo and Mars R&D exec who went on to found Sydney-based alt meat business v2food in 2019.
“At v2, we were excited about using algal protein pigments in plant-based meat and then quickly realized that the economics of growing algae were terrible,” says Hazell, who has just secured AUD1.1 million ($0.7 million) from the University of Technology Sydney, Better Bite Ventures, and other investors.
“So it was a case of what do we do?” he tells AgFunderNews. “Do we back away or get into the fundamentals of the physics of growing algae so we can make something that would cost a few cents per kilo of [alt] meat? And we succeeded.”
He adds: “The oil companies dropped algae biofuels like a hot potato when the economics didn’t add up, and the algae market today is focused on high value ingredients like omega-3s because it’s so expensive. But that’s because no one has really tackled the fundamental drivers of productivity.
“What we’re talking about at Algenie is growing microalgae in photobioreactors where we have total control and a full suite of genetic tools to maximize productivity, coupled with cheap renewables.”
“If you think about what this can unlock, the possibilities are endless,” says Hazell, who aims to license the technology—which he says can open applications from biofuels to bioplastics, textiles, and proteins for aquaculture—and collaborate with partners to co-invest in large-scale production.
“If you can get to a price close to crude oil, you can essentially replace petrochemicals.”
“We’re thrilled to be the first investors in Algenie, a company with the potential to re-invent algae production, in the process of sequestering carbon at gigaton scales.” Simon Newstead, founding partner, Better Bite Ventures
Continuous production
According to Hazell: “There are two ways of growing algae. You can grow it using light, or you can grow it like yeast or bacteria in a heterotrophic process using sugars as the primary carbon source. But that’s a mature industry and limits your cost structure.”
If you’re growing algae in sugar, moreover, bacteria, yeast and mold are a constant threat, he points out. In a phototrophic process using light as the primary energy source, however, these organisms can’t grow because there’s nothing for them to feed on, which means you can deploy a continuous process.
“The only way to get high productivity and low cost is to get the algae to their peak performance, keep them there, and harvest continuously,” says Hazell. “It’s manufacturing 101. With phototrophic systems, you’re in a great position to do that. If you’re in heterotrophic process, any organism that gobbles up sugar will be competing with your algae.”
‘Our aim is to get to $1 per kilo’
In an indoor phototrophic process using LEDs rather than sunlight, he says, “You need CO2, the right photons, and a small amount of nutrients such as nitrogen and phosphorus. The principal cost of growing algae in this way is the cost of renewable energy for LEDs that provide the right photons in the right way, and the capital cost of photobioreactors. Renewable energy costs are continuing to go down, so the main problem to be solved is the capital cost of the reactors.”
He adds: “Existing photobioreactors are mainly tubular systems or flat plate systems. But with these systems, there’s no way you’re ever going to be able to do plastics or biofuels cost competitively because the capital costs are 10 times too high.”
Core to Algenie’s proposition is a novel photobioreactor and a continuous, patented, process whereby algae flows down a channel shaped into a continuous helix. Advanced LEDs provide optimal lighting conditions, driving rapid growth in a process Hazell claims can reduce production costs by a factor of ten. “Our aim is to get to $1 per kilo.”
He explains: “We are dramatically compressing the productive area by having multiple thin layers of algae. In traditional photobioreactors, most of the algae is shadowed by its neighbors, and only achieves maybe 1% of its productive capacity because it’s sitting in the dark most of the time. If you have very thin layers, you can get much higher productivity. If you only have one thin layer, you need an area the size of France to do a gigaton, but we’ve come up with a way of getting multiple thin layers in a small space at very low cost.”
The design enables some algae species to double in quantity every 2-3 hours under ideal conditions, enough to produce 100 tons per year in a space the size of a shipping container, claims Hazell, who is collaborating with Prof. Mathieu Pernice at the University of Technology Sydney (UTS) to develop and optimize algae strains.
Asked if a system relying on LEDs—like vertical farms—is problematic, he says: “We’re orders of magnitude more productive than a vertical farm in terms of our aerial productivity. Yes, the bottom line is you need renewables, but the capacity for Australia to generate renewable energy is huge. Likewise, vertical farming operations are pretty complex, whereas what we’re proposing is very simple by comparison.”
AI-enabled R&D process
So what strains of algae is Algenie working with?
According to Hazell, “We’re working with UTS on mutating wild algae strains to get the optimal chemistry, and then optimizing the productivity of these strains in our bioreactors through an AI-driven process that does a huge array of experiments in parallel. This is very new for algae, so we’re developing that ability to tune the performance of our strains really quickly.”
Licensing model
Right now, Algenie has a prototype thin layer photobioreactor running in the basement of UTS, says Hazell.
“The idea is that through licensing we will enable lots of companies to use this technology without having to hire a biologist. So we will create and sell the photobioreactor and license the software, the elite algae strain and the unique operating conditions that will give you maximum productivity.
“Basically it means that people who do not have any aspiration to get into algae, but want the chemistry, can get it.
“We want to be an enabler for multiple industries and companies.”
As for investors, he says, “If you even mention the word algae, some of them start running for the exits because they think it’s uneconomic, so we have to prove we’ve cracked it and that we can own it.”
Further reading:
Algae’s second bloom? ‘Resiliency and productivity are key,’ say second generation startups
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