Characterizing weather-related biophysical and financial risks in algal biofuel production

Abstract

Algal biofuels are a renewable liquid fuel with advantages over crop-based biofuels, including higher yield per acre, the ability to recycle production inputs, and the option to create valuable co-products. Previous analyses suggest that algal biofuels could become cost-competitive if technological improvements are achieved. Most previous research, however, does not consider the impact of seasonal and year-to-year uncertainty in weather factors, such as solar irradiance and temperature, on biomass productivity, and those that do are based on limited meteorological records. This study explores the influence of weather uncertainty on biomass growth and biorefinery revenues as well as impacts from market price uncertainty. The performance of a hypothetical algal biorefinery in Vero Beach, Florida is explored by combining stochastic weather generation, biophysical growth modelling, stochastic market price generation, and techno-economic analysis. Results show coefficient of variation values of 8–15% in seasonal revenues for an algae producer, and that the variation in annual revenues was lower than that of corn, soybean, and cotton. In sensitivity analyses, both weather and price fluctuations are found to be significant sources of financial risk. This is the first probabilistic quantification of weather-related production impacts for algae producers, which is relevant given global growth in the algae industry as evidenced by the new eligibility of algae for crop insurance in the US 2018 Farm Bill.