Thursday, May 5, 2011
Back of the Envelope on Biofuel Claims
Bio-tech startup Joule Unlimited is claiming to be close to commercializing a closed system for bio-fuel production using custom genetically engineered organisms.
It sounds about perfect: no fresh water required, "up to" 15,000 gallons of ethanol per acre produced, $20/barrel equivalent costs, etc.
Realistic? Well... It's hard to know where to begin.
For starters, the cost estimates are worthless because they include subsidies without mentioning the size of the subsidies used in the calculations. It's really no better than lying outright or just making up some arbitrary and false number like Poet's $1/gallon ethanol. It tells us nothing about the economic feasibility of their approach. So why hide the numbers? I could speculate, but let's just say that the politician photo shoots and politicians being adding to their board of directors isn't encouraging.
But, let's give them a chance. Here are some quick back of the envelope calculations to try to ballpark these claims.
Let's start with figuring out what percentage of the energy from the sun would need to be captured to create 15,000 gallons of ethanol. Is that even realistic?
Wolfram Alpha makes this pretty easy. I will use the figure from of 3400 MJ/sq meter/year of insolation (solar energy striking the ground) in Phoenix:
Energy content of 15,000 gallons of ethanol /One year of solar energy per acre in Phoenix = 10%.
That seems really high. I seem to remember normal energy production rates under 2%.
Now let's try to get a feel for the cost. Working backwards, let's be generous and assume that "up to 15,000" really means an average of 15,000 gallons per acre per year. At $2.50/gallon, one acre would generate $37,500 worth of ethanol each year.
Let's ignore operating costs and use a capitalization factor of 10. How much do we get to spend on these magic fuel machines? Multiplying by 10, the capital costs to build and install an acre of these devices needs to cost less than $375,000 per acre or $928 per square meter. Ouch!
So, I think we've found the catch. It costs more than $928 for a square meter of bay window, let alone a sophisticated closed-loop bio-reactor ecosystem. It probably costs them 10x $928 to build and install one of these devices. And that's just for the capital costs.
If the economics were really favorable, they would have no need to hide them. My conclusion? Their $0.60/gallon AFTER subsidies cost prediction probably works out to be more than $25/gallon BEFORE subsidies.
Apparently, they actually published a paper about their energy calculations. It turns out that the 15,000 barrels per acre is entirely theoretical and they have offered no numbers detailing what they have actually been able to achieve.
In other words, this is just another example of pure, dishonest hype, probably to snare tax dollars. For all we know they haven't been able to produce 10% of the theoretical maximum and my $25/gallon estimate of the current state of their technology is probably low.