Feb. 26 (Bloomberg) -- AlgaEnergy SA, part-owned by Spain’s Iberdrola SA and Repsol SA, is in talks with potential partners to set up a plant in Mexico to supply the American markets with biomass made from algae.
Chief Executive Officer Augusto Rodriguez-Villa will travel to Mexico next week to meet executives from local companies to discuss a joint venture to build a 1-million liter biomass plant running on microalgae, he said in an interview.
“We want to gain a foothold in Mexico to expand in Latin America and the U.S. from there,” Rodriguez-Villa said by phone yesterday from Madrid, where AlgaEnergy is based. “The joint venture will get our knowledge and our future partner will finance setting up the first production plant.”
The International Energy Agency, a policy adviser for industrialized nations, estimates biofuels must supply about 27 percent of road fuels worldwide by 2050, up from 3 percent in 2012, to reduce crude-oil dependence and carbon emissions. Biofuels from edible crops like corn have been blamed for food shortages, spurring interest in algae, which doesn’t take up agricultural land and can be made using wastewater.
AlgaEnergy will next month begin operating a 7-million-euro ($9.6 million) plant it’s building in Arcos de la Frontera in southern Spain. The facility will start with a capacity of 350,000 liters and ramp up to a million liters with an annual output of 100 metric tons of biomass by year-end, Rodriguez-Villa said.
Flu gases from a 1.6-gigawatt Iberdrola combined-cycle power plant will feed the algae cultures at the plant. Repsol agreed to buy the algal oil output to turn it into second-generation biodiesel.
Microalgae use sunlight, water and carbon dioxide to produce oxygen and biofuel through photosynthesis. The plants can be cultivated on marginal land in open ponds or in bioreactors, incubators that protect them from contamination and maintain a steady temperature for more intensive production.
Emissions from factories and power plants can be pumped into the bioreactors. That makes algae an alternative to carbon-capture and storage projects, which inject carbon dioxide into underground rock formations. Carbon dioxide, one of the gases blamed for global warming, makes algae grow faster.
AlgaEnergy says it has developed a new type of bioreactor and process that allows it to harvest byproducts that it will seek to sell to the cosmetics, feed and food industry. The byproducts account for about 80 percent of the total mass.
The additional revenue will “more than make up” for biodiesel production costs that are “not yet competitive,” Rodriguez-Villa said, declining to say how much it’s losing on algal fuel.
Algae companies continue to produce biofuel at a loss to attract “significant” partners, said Claire Curry, a bioenergy analyst at Bloomberg New Energy Finance.
“Oil companies, for instance, are mandated by governments to blend non-food biofuels that are currently in scarce supply and therefore will encourage algae companies to produce biofuels,” she said by e-mail.
Repsol paid 3 million euros in 2010 and Iberdrola paid 2 million euros in 2009 for a 20 percent stake each in AlgaEnergy, Rodriguez-Villa said. The company employs and contracts about 40 people and has won research grants from the Spanish government and the European Union.
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