Using life cycle assessment and techno-economic analysis in a real options framework to inform the design of algal biofuel production facilities

Jordan D. Kern, Adam M. Hise, Greg W. Characklis, Robin Gerlach, Sridhar Viamajala, Robert D. Gardner

Research output: Contribution to journalArticlepeer-review

33 Scopus citations

Abstract

This study investigates the use of “real options analysis” (ROA) to quantify the value of greater product flexibility at algal biofuel production facilities. A deterministic optimization framework is integrated with a combined life cycle assessment/techno-economic analysis model and subjected to an ensemble of 30-year commodity price trajectories. Profits are maximized for two competing plant configurations: 1) one that sells lipid-extracted algae as animal feed only; and 2) one that can sell lipid-extracted algae as feed or use it to recover nutrients and energy, due to an up-front investment in anaerobic digestion/combined heat and power. Results show that added investment in plant flexibility does not result in an improvement in net present value, because current feed meal prices discourage use of lipid-extracted algae for nutrient and energy recovery. However, this study demonstrates that ROA provides many useful insights regarding plant design that cannot be captured via traditional techno-economic modeling.

Original languageEnglish (US)
Pages (from-to)418-428
Number of pages11
JournalBioresource Technology
Volume225
DOIs
StatePublished - Feb 1 2017

Bibliographical note

Funding Information:
This work was supported by the U.S. Department of Energy (Grant #: DE-EE0005993/000) and the National Science Foundation's Sustainable Energy Pathways program (Award #: SEP-1230710).

Publisher Copyright:
© 2016 Elsevier Ltd

Keywords

  • Algae
  • Biofuels
  • Life cycle assessment
  • Real options
  • Techno-economic analysis

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