"Wild algae" biofuel firm seeks funding injection

New Zealand-based biofuel start-up Aquaflow Bionomics has embarked on a fund-raising programme in Australia as it seeks to attract financing for the first of up to 16 pilot plants to demonstrate what it describes as its unique algae fuel technology.

Large numbers of energy companies worldwide, including oil giants Exxon Mobil and BP, are investing heavily in developing algae-based fuels, with almost all focusing on extracting lipids from algae grown in controlled environments.

Aquaflow, however, has developed technology to harvest "wild algae" found in municipal sewage ponds, farm outflows and polluted water courses, and either convert it into green crude or refine it into other biofuels and chemicals.

Director Nick Gerritson said the attraction of Aquaflow's approach is that it avoids the large, upfront capital costs of other algae-based fuel technologies which require the development of monocultures and bioreactors.

Aquaflow's units come in 40-feet containers, are deployed in remote locations without difficulty, and can be easily scaled, Gerritson said. "It's plug and play, we just plug into the existing infrastructure," he added.

The company has been running a pilot plant of its algae harvester at the Blenheim District Sewage ponds in New Zealand, where it has stockpiled 40 tonnes of algae, some of which has already been used to produce jet fuel.

Aquaflow is in discussions with more than 16 possible projects over three continents, Gerritson said, including talks with municipal authorities and corporates seeking to develop low-carbon fuels.

The firm said that its proposed plants could draw on a range of potential revenue streams, noting that while its principal market is water remediation and the sale of recycled water, it would also be able to charge for technology transfer fees, royalties, and the algae feedstock, green crude and other produ cts that result from the process.

Aquaflow's investor presentation includes forecast revenue of A$5.3m ($4.4m, £2.7m) in 2010/11, rising to A$94.4m in 2014/15, with pre-tax profits forecast to jump from A$110,000 to A$33.2m over the same period.

These forecasts include only the sale of its equipment and remediated water sales. It does not include revenue from the sale of green crude or from the generation of carbon credits.

The efforts to raise A$2.5m in funding are expected to be the last before a possible IPO in the next 12 months. The company's largest shareholder is the Singapore renewable energy investor Pure Power with 19.9 per cent, while UOP, the biofuel subsidiary of engineering giant Honeywell, has also signed an MOU with the firm to help market the technology and integrate it into its projects.

In related news, the Australian government last week announced it has granted A$15m in funding to seven projects developing so-called "second-generation" biofuels. These include two algae fuel projects, and others looking to develop fuel sources from sugar cane, crop waste and vegetation such as mallee.

Second-generation biofuels are widely regarded as more environmentally sustainable than more established biofuels such as corn-based ethanol, as they can be developed using non-food crops that do not eat into existing agricultural land, and as such are less likely to contribute to higher food prices and deforestation.

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