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Is Dick Warburton already scaring off renewable energy investors?

A Californian algae producer has mysteriously abandoned its $300 million Pilbara project, writes freelance journalist Kerry Faulkner.

A Californian company that secured more than $2 million of state government funding for its environmentally friendly pilot algae farm in the Pilbara has quietly quit Australia.

Aurora Algae’s Karratha pilot plant was a forerunner to a 100-hectare commercial algae farm at Maitland near Karratha at an estimated cost of $300 million. In 2012, the Western Australian government announced Aurora’s $2 million grant for the pilot project through its low-emissions energy development (LEED) funding. In 2013, Premier Colin Barnett announced a further $10 million funding for a “common user” pipeline for saltwater Aurora needed for its commercial algae farm.

The pilot was a success, demonstrating production of up to 15 tonnes of dried algae per month destined for use in the production of biodiesel, fish and animal feed, and omega-3 oils for human health products.

But when the Karratha pilot finished in December 2013, Aurora’s then-CEO Greg Bafalis said high labour costs and extreme heat had prompted the company to look further south to Geraldton as an alternative site for its commercial farm.

A number of test ponds established at Geraldton’s Separation Point Maritime Institute in early 2014 to collect data are now closed, as is Aurora’s West Perth head office. Aurora spokesman Jim Astwood confirmed this week the company had quit Australia to focus on developing a former shrimp farm in Rio Hondo, Texas, as its first commercial algae farm.

“Aurora will commercialise our technology and products first [in] the US and then expand globally, at which time locations for which we have significant experience may, at that future date, become candidates for expansion,” he said.

Western Australian Environment Minister Albert Jacob said this week state government authorities had not been advised Aurora Algae had left Australia. He said advice given to him was that both Geraldton and Texas would go into production to even out seasonal algae variations.

Jacob says Aurora’s $2 million state government LEED funding was specifically for Aurora’s Karratha pilot plant, but he defends the funding despite Aurora pulling out because the pilot plant provided information about low-emission technology that could be used globally.

The minister also says the grant eligibility criteria stipulated that most of the expenditure for the funded project must occur in WA, and Aurora has fulfilled that criteria.

“During the funding period, the company was required to adhere to the terms of the financial assistance agreement,” he said. “The agreement does not control companies after their project is completed.”

“A key objective of the LEED fund is wider adoption of low-emission technologies. Allowing companies to respond to market forces is likely to result in the best prospects for, and adoption of, low-emissions technologies that provide global benefits, regardless of location.”

Jacob says the $10 million committed by the state government for the saltwater pipeline was never provided to Aurora and remains available for future parties to complete the project, subject to meeting certain conditions.

WA opposition environment spokesman Chris Tallentire says  he’d like to see the information Aurora has gathered through its government-funded research made publicly available.

“I am all in favour of WA assisting research into different renewable energy technology, but we must make sure we have the right business arrangement in place so things just don’t disappear,” he said.

He says Dick Warburton’s Renewable Energy Target review, which has suggested watering down the RET, would scare off big investors like Aurora.

Karratha and Districts Chamber of Commerce and Industry CEO John Lally say it is disappointing Aurora Algae has failed to realise the operating potential in the region.

“[However] it had proven that a commercial scale microalgae production facility is possible in Karratha especially as local business cost-pressures continue to ease,” he said. “We are confident Karratha will one day be Aurora Algae’s biggest missed opportunity, and our city’s future will include a thriving renewable energy industry.”

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  • 1
    Tamas Calderwood
    Posted Monday, 1 September 2014 at 1:42 pm | Permalink

    Kerry Faulkner opens by saying “A Californian company that secured more than $2 million of state government funding…” and continues that “In 2013, Premier Colin Barnett announced a further $10 million funding…”.

    Urgh… is there a “clean energy” company that DOESN’T have its hand in the taxpayer pocket? Shouldn’t the RET review be celebrated if it puts an end to these kind of industry boondoggles? Why does “clean energy” get a pass from Crikey when other corporate welfare is normally condemned?

  • 2
    Matt Hardin
    Posted Monday, 1 September 2014 at 3:51 pm | Permalink

    $10 million was for a common user pipeline. In other words, shared infrastructure like roads, rails and ports. Given the money that has been rained down on mining, Queen Elizabeth quay and the new stadium this is all small potatoes.

  • 3
    JennyWren
    Posted Tuesday, 2 September 2014 at 10:30 am | Permalink

    I think there is more of an agenda to this having read Andrew Elder’s most recent blogpost: http://andrewelder.blogspot.com.au/

  • 4
    Liamj
    Posted Tuesday, 2 September 2014 at 9:39 pm | Permalink

    Is Dick Warburton already scaring off renewable energy investors?”
    Yes, but Aurora Algae is not the project to show this with, instead consider reports on billions of investment dollars & thousands of jobs lost from Pacific Hydro & Infinigen.. http://reneweconomy.com.au/2014/ret-cuts-will-leave-renewables-as-good-as-dead-pachydro-chief-64352

    Does algae-to-oil even qualify as an energy producer, given heavy costs in maintaining pure strains & dehydrating crop? Sure some oil can be produced but have yet to see any research showing net energy yield. Aurora probably just exhausted the grant and then shutdown, much like the co2 sequestration ‘trials’ that the coal industry milks govt for.

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