Xcel Energy funds algae biodiesel research project at the University of Minnesota

In Minnesota, Xcel Energy has pledged $150,000 to assist in funding an algae-to-biodiesel research project sponsored by the University and the Metropolitan Council. Researchers at the Metropolitan Council and the University of Minnesota’s Initiative for Renewable Energy and the Environment (IREE) are conducting the research. The grant is a follow-on to more than $4.5 million given to five other University of Minnesota projects from the Xcel Energy Renewable Development Fund.

The US Defense Department is estimating that the current production cost of algae oil exceeds $20 per gallon. The Department is exploring the potential of algae oil as a jet fuel source, but said that they need the cost of the oil to get down to $3 per gallon.

The US Department of Energy recently partnered with Chevron in a research effort to develop higher-yield strains of micro algae. The Defense Advanced Research Projects Agency is working on a project with Honeywell, General Electric and the University of North Dakota.

Business Week published a roundup on developments in algae-based biodiesel, highlighting startups by Chevron, Honeywell and Boeing, as well as the technical challenges of producing algae in a controlled production environment and developing a commercially viable process to extract the oil.

The report quoted a prediction by Martin Tobias, former CEO of Imperium Renewables, that he expects the cost of algae oil to fall from as high as $20 per gallon today to $1.70 by 2011, with production capacity reaching 100 Mgy by that point.

The report focused on the growing pains at algae farms, citing the GreenFuels demonstration of algae oil production that was shut down after two weeks over the summer because of problems in controlling the growth rate of the algae.

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