The Cambridge, Mass.-based company detailed a multi-year deal worth $92 million to build greenhouses that grow algae, which can be harvested for vegetable oil to make biodiesel or to make animal feed.
In the greenhouses, the algae will be fed sunlight and carbon dioxide from the Holcim cement plant near Jerez, Spain.
The project developer is Spain's Aurantia, which specializes in renewable energy. GreenFuel executives have said they are pursuing other deals with large polluters, such as utilities and heavy industry, with other project developers in different parts of the world.
The deal, which has been rumored for months, is a milestone for the 7-year-old company with roots at MIT and for the budding algae industry overall.
GreenFuel Technologies originally tested its algae-growing process in plastic bags with an Arizona utility. That project ran into trouble when the cost of harvesting the algae biomass was too high.
Its greenhouse design--which the company will not discuss in detail -- grows algae without tubes and uses an automated harvesting system, according to CEO Simon Upfill-Brown. The water in which the algae grows is recycled.
GreenFuel and Aurantia now have a 100 square-meter prototype operating. It's next stage, slated for completion in about a year, is a 1000-meter installation.
It hopes that by 2011, it will have a full-scale operation, which will take up 100 hectares, or about 250 acres, Upfill-Brown said.
A 100-hectare algae farm would consume about 50,000 metric tons of carbon dioxide per year--about 10 percent of its the cement factory's annual emissions--and grow about 25,000 tones of algae biomass.
Cement makers are some of the largest emitters of carbon dioxide. With the farm, Holcim will get positive PR and take a step toward mandatory emissions cuts, Upfill-Brown said.
He expects that the project developers will choose different strains of algae to optimize for different end products, be it oil or feed.
In the past year, there have several companies formed to make algae for oils for fuels or pharmaceuticals. But thus far, there aren't any companies producing algae for fuel at commercial scale.
"Some people are making clearly outrageous claims. We're at the stage where we can say we are pretty comfortable and very optimistic that we're getting all the way there in phases," he said.
On top of technical challenges, a potential problem with algae ventures is falling petroleum prices, which make it harder to be cost competitive. Struggling biodiesel maker Imperium Renewables is said to have delayed an algae farming venture in Hawaii.
Upfill-Brown said the company expects to raise a series C round of funding in the next month to further develop its greenhouse. It intends to seek out other project developer customers like Aurantia as customers.
Updated at 4:55 a.m. PT with corrected figure for amount of carbon dioxide consumed by a 100 hectare algae farm.
By Martin LaMonica