Back in January we released an article about algae gasoline being sold in California during a 30 day trial program. Participating Gas Stations reported a whooping 35% increase in sales at the test sites. In addition, a survey conducted among the buyers revealed driver preference for algae based fuels over conventional fuels.
All of which begs the question…would buyers pay a premium for algae based fuels?
The pilot test was conducted at Propel’s clean fuel stations in San Jose, Oakland, Berkeley, and Redwood City,
Even more interesting, a follow-up survey among buyers revealed that 92% of customers said that they would be more likely to buy algae based fuel for it’s environmental benefits. 70% said they would buy the fuel more frequently if it were derived from algae, and nearly 40% said they would pay extra.
This pilot program was the first time algae gasoline were ever sold to the public. It was retailed at a parity price with conventional diesel.
OK, very interesting…but do they have an encore?
OK, here is where it gets’ interesting. Understandably, both companies are keeping silent about their future plans, but here is what we do know. In December Propel Fuels anchored it’s Series D funding with 11 million from existing investors, then went on to secure another 10 million in debt financing. With the new capital in place, Propel will be able to build out it’s network of gas stations that are offering the cleanest, most sustainable, not to mention domestically produced, biofuels in the country today.
It currently has gas stations in California and Washington state and are planing building another 200 stations to service new and existing markets over the next 2 years. 
Propel operates a growing network of stations that provide renewable fuels (Flex Fuel E85, biodiesel blends, SolaDiesel) alongside the conventional gasoline that most drivers use today.
Solazyme, Propel’s partner, was one of algae’s first benefactors and has been a leader in the algae biofuels ever since. They have achieved key performance metrics in both fuel and chemical markets and they believe this allows them to manufacture oils today at a cost below $1000 per metric ton ($3.44 per gallon, or $0.91 per liter) if the algae biofuel is produced in a built for purpose commercial plant.
In 2012 Solazyme increased their own capacity to 8,000 metric tons by expanding their facility in Peoria, as well as their phase I and Phase II Roquette Nutritional facilities. The kicker is, they expect to have 550,000 tons capacity by 2015. This would support over 1 billion in biofuel revenue.
To make matters more interesting, Solazyme also entered into non-binding offtake agreement with both Dow Chemical and Qantas Airlines. Dow Chemical has agreed to purchase 20 million gallons (76 million liters) of oils in 2013, rising to 60 million gallons (227 million liters) by 2015. Qantas Airlines will purchase a minimum of 200 to 400 millions liters of jet fuel per year.
Can you say, the algae revolution has begun?
All well and good…what about fuel performance?
According to Life Cycle Associates, an independent greenhouse gas measurement firm, they determined that soladiesel provides 85-93% reduction in greenhouse gas emmissions compared with conventional diesel fuel. The NREL (National Renewable Energy Labs) indicates that a 20% blend significantly out preformed ultra-low sulphur diesel in hydrocarbons (THC), carbon dioxide (CO), and tail pipe emissions.by 20%.
Bob Ames, VP of fuels at Solazyme said “Our fuels have already been successfully demonstrated in fleet vehicles, corporate buses, military applications and the first U.S. commercial flight on biofuel,” said Bob Ames, VP of Fuels, Solazyme. “The successful pilot program with Propel further exhibits strong consumer appetite for the superior performance and environmental properties of Soladiesel.”
“Propel is committed to providing drivers true choice at the pump by bringing to market the world’s highest quality and most sustainable fuels,” said Matt Horton, CEO of Propel Fuels. “The results show strong preference for algae-based fuel, and we are thrilled to have partnered with Solazyme to enable our customers to be the first in the country to purchase this next generation biofuel.”
So what does this mean to us?
It means, first of all, that not only was algae biofuels history made last December when they rolled out the first commercially available algae biofuels, but it was no freak accident of the market. It was the first step as part of a planned expansion into the market. This means, commercial algae based biofuels are now a reality. A historic first, in and of itself.
Second it means there is also a growing acceptance of algae biofuels by the government based on their low environmental impact. No easy feat. This one fact has slowed many alternative energies from ever gaining the market at all.
Third, it shows growing public awareness of, and acceptance to, algae based biofuels in general and algae gasoline in particular. Not only acceptance, but forward thinking populations are also willing to buy it at higher cost in order to have domestically produced, renewable energy and transportation fuels. This bodes very well for small scale algae biorefineries and producers.
“Algae Biorefineries and Microfarms” has been approved by my publisher and slated for release in the next month or two.
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