title: Using life cycle assessment and techno-economic analysis in a real options framework to inform the design of algal biofuel production facilities.
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.
authors.affiliation: Institute for the Environment, University of North Carolina at Chapel Hill, 100 Europa Dr., Suite 490, Chapel Hill, NC 27517, United States. Electronic address: jdkern@live.unc.edu.
authors.forename: Jordan D
authors.initials: JD
authors.lastname: Kern
authors.affiliation: Harbor Research, Boulder, CO 80302, United States.
authors.forename: Adam M
authors.initials: AM
authors.lastname: Hise
authors.affiliation: Department of Environmental Science and Engineering, University of North Carolina, Chapel Hill, NC 24060, United States.
authors.forename: Greg W
authors.initials: GW
authors.lastname: Characklis
authors.affiliation: Department of Chemical and Biological Engineering, Center for Biofilm Engineering, Montana State University, Bozeman, MT 59717, United States.
authors.forename: Robin
authors.initials: R
authors.lastname: Gerlach
authors.affiliation: Department of Chemical and Environmental Engineering, The University of Toledo, Toledo, OH 43606, United States.
authors.forename: Sridhar
authors.initials: S
authors.lastname: Viamajala
authors.affiliation: Department of Bioproducts and Biosystems Engineering, University of Minnesota, St. Paul, MN 55108, United States.
authors.forename: Robert D
authors.initials: RD
authors.lastname: Gardner
mesh_terms: D000821:Animal Feed / Q000191:economics; D056804:Biofuels / Q000191:economics; D001709:Biotechnology / Q000191:economics / Q000295:instrumentation / Q000379:methods*; D003132:Commerce; D004777:Environment; D007449:Investments; D058086:Microalgae; D018803:Models, Economic; D008962:Models, Theoretical
chemical_list: D056804:Biofuels
keywords: Algae; Biofuels; Life cycle assessment; Real options; Techno-economic analysis