Home / Chapter 7 - Commercial Contracts for Algae Biofuels Projects

Chapter 7 - Commercial Contracts for Algae Biofuels Projects


The preceding chapters have described steps for establishing an algae biofuels facility:  deciding on the algae cultivation technology, gathering the capital, securing the land, and building the physical facility.  The operation of the actual business enterprise will be based on:  purchasing the raw materials for the algae biofuels facility, selling the finished products, and managing the commercial operations of the facility.  Ideally, the planning and development of these contracts will influence all aspects of the project development process.  The enterprise’s ability to execute on these contracts will dictate the success of the business venture.  The following decisions must be finalized and translated into commercial agreements:

        • What raw materials (e.g. nutrients, carbon dioxide, energy) will the facility require for the algae biofuels production process and to what scale?
        • Will in-bound and out-bound logistics use truck, rail, barge, or ship movements or a combination of these modalities?
        • What finished products will the algae facility produce and to what standards of quality?
        • What price structure(s) will be used for the purchase of raw materials and the sale of finished goods?
        • What risk management techniques will be used to mitigate the accompanying risks?

A variety of end products can be produced from algae for commercial sale including oil, biocrude, biodiesel, ethanol, biomass, animal feed, and nutritional supplements.   Contracts for the sale of animal feed or nutritional supplements may be subject to specific feed laws or FDA requirements and should be reviewed carefully. This chapter generally focuses on the commercial contracts for the production and sale of biofuels using algae oil as the feedstock.

New Model for Historically Commodity-Driven Business

Conclusion - Plan and Execute

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