Algae.Tec is developing a technology to produce algae commercially to provide renewable and sustainable food and energy solutions.
Company: Algae.Tec Ltd (ASX:AEB)
Sector: Agriculture, Forestry and Fishing
Profile: Algae.Tec is growing and harvesting algae in a carefully controlled environment for future application in renewable fuels, nutraceuticals, pharmaceuticals, personal products, and protein food sources.
Why R&D was needed
Algae are a diverse group of aquatic, estuarine and marine plant organisms which can vary in size from microscopic to many metres in length.1 Over the last decade, Algae.Tec has developed an enclosed modular high-yield, algae growth manufacturing system to produce sustainable and renewable proteins and oils. The potential to derive oil from algae and its clean technology applications have been known for some time. However, optimising the production process and realising the downstream conversion to renewable fuels to achieve economically and environmentally viable outcomes is a challenge faced by all participants in the sector.
Since starting in 2007, Algae.Tec has undertaken laboratory, bench-scale and pilot tests and product trials to commercialise algae production. Creating a controlled bioreactor-like environment to allow monitoring of external factors such as water, light and air while reducing the need for grid electricity to a minimum has been a complex process.
CFO of Algae.Tec Richard Webb says that since the start of the Company, R&D has been the sole focus of activity with 95% of the Company's spend allocated to R&D. Developing a technology that allows growing algae on a large scale is a prolonged process as every time the scope increases in a laboratory setting, parameters change which in turn need to be controlled and tested.
Whilst the long-term goal of Algae.Tec is to manufacture an alternative fuel source, for example in the form of bio diesel and ethanol used by aircraft, the chemical composition of algae enables the production of high protein feedstocks, healthy nutrients, specialty oils for personal products or pharmaceuticals.
To diminish dependency on external power supplies to produce algae, Algae.Tec focused part of their R&D to develop proprietary artificial lighting and solar technology systems that can be applied to a controlled environment.
This technology is suitable to optimise the growth of crops and other types of plants which will be highly beneficial for the agriculture industry in the future.
“I've got no doubt that the company probably would have struggled 3-4 years ago if we hadn't had the R&D support. We would never have been able to achieve what we have achieved.”RICHARD WEBB
How the Research and Development Tax Incentive Helps
Algae.Tec is part of an industry that is of increasing interest to companies, governments and society. Given the devastating impact that carbon emissions have on the climate, finding alternatives to existing energy and fuel sources has become a global challenge. With the help of the RDTI, Algae.Tec is close to commercialising the manufacturing of products based on algae, which has the potential to significantly reduce CO2 emissions. The advances in regards to solar power technology that Algae.Tec has achieved will reduce the need for energy derived from coal, oil or gas.
Mr Webb believes that the RDTI was instrumental in supporting the development of Algae.Tec's technology:
“If we hadn't had the R&D grant, we wouldn't be here today because we would not have been able to raise the funds in the investment climate post the GFC in 2008. They enabled us to reach a stage where we are targeting self-sustainability by the end of 2018,” he says.
Mr. Webb adds that it is difficult to obtain funding from private investors or banks, especially within an industry that is still relatively new and a company that is trying to develop a completely novel technology. Whilst Algae.Tec has managed to secure external funding to a certain degree, this has been subject to market conditions and interests, whereas the government support provided a reliable source of funding.
“[The RDTI] allows Algae.Tec to run a continuous operation as opposed to stop and start while waiting for additional funding,” he says.
The Company's R&D activities have not only provided employment opportunities to the Company's staff but also created opportunities for other service industries and companies supporting the running of their plants in recent years. It also initiated a partnership with the University of Wollongong, and the Company's CFO thinks that the future will bring more opportunities to collaborate with research facilities and universities across the country and globally.
Once the Company commercially manufactures products, there will be more jobs created. The lighting technology that Algae.Tec developed as result of their R&D also has applications for future agricultural projects with a focus on regional WA - in turn creating more regional economic opportunities.
The potential of products realised through algae will have economic impacts on government spending and businesses' bottom-lines. As algae is a much more cost-effective source of energy, future R&D success means the government would no longer have to subsidise as much conventional power production.
Offering a solution to the sequestration of CO2 emissions will also benefit businesses across many sectors, especially those heavily relying on energy in their production lines. In addition, it is very relevant to industry operating heavy machinery and the automotive industry in general, as fuels derived from algae burn cleaner. This assists engines in a number of different ways. By using algae based fuel, engines are cleaned to the point where renewal of oil filters is not needed as often.
Mr Webb also believes that the RDTI ensures that Australia can provide opportunities for highly skilled workers so university graduates and experts in various sectors do not need to seek employment outside of Australia.
“The R&D grant should enable Australia to actually create its own technology and export it to other countries. This in itself will attract the right sort of people into the country to undertake that work and the research needed.”RICHARD WEBB
RDTI Impact Facts
- Development of a controlled growing system with the use of solar technology with minimal power costs
- Long-term benefits to the environment and society through applications in renewable fuels, nutraceuticals, pharmaceuticals, personal products, and protein food sources
- Potential to reduce the need for government subsidised energy in the future and a cost-effective solution to the sequestration of CO2 emissions to heavy industry
- Business opportunities for supporting industries
- Employment opportunities and partnerships with research facilities and universities