Case Descriptions

Swedish Algae Factory

Swedish Algae Factory (SAF) is a start up within the cleantech industry which focuses on creating environmentally friendly wastewater treatment, combined with the production of organic algae biomass and nanoporous silica material. SAF was started in 2012 as a project by two students from Chalmers School of Entrepreneurship (CSE)[1] together with researchers from the University of Gothenburg and its Department of Marine Biology. The project was first run for one year at Encubator, a business incubator linked to CSE. The current team running the company consists of one of the original co-founding students from CSE, four algae researchers from the university, as well as one process engineer and two additional board members.

I t all started with a polar expedition in 2012 during which two researchers from the University of Gothenburg found a new type of algae growing on polar ice. These algae have distinctive characteristics suitable for the Nordic countries; specifically, they are able to grow at low temperatures and under low light conditions. With regard to this, SAF has developed an algae cultivation system, which is both surface and energy efficient, and as a result less energy is needed when producing the algae. Today, SAF is focusing on creating a business model that includes a circular economic mindset and in which carbon dioxide, nitrogen and phosphorus waste is transformed into valuable products. This type of algae, which belongs to the group of diatoms, contains various parts which may be useful in different ways. Therefore, in order to understand what kind of product is suitable for selling, SAF is now testing the algae in several applications together with different counterparts.

The first area of use is related to wastewater treatment. Algae require nitrogen, phosphorus and carbon dioxide to grow. By letting the algae grow in wastewater, the nutrition can be provided to the cultivation system to cultivate the algae in an environmentally friendly way and, at the same time, clean the water from nutrition. Thereafter, when the harvesting of the algae is completed, the algae biomass can be transformed into bio-crude oil by exposing it to a high temperature and high pressure. The bio-crude oil is suitable for production of fuel and phosphorus-rich biochar, a charcoal which can contribute to the recycling of phosphorous. Due to their unique characteristics, the algae make it possible to produce biofuel in an energy-efficient way since they do not need artificial light or heating during cold periods. Furthermore, the silica shell surrounding the algae can be removed and used in different industrial applications. Since this is a nanoporous material, which is both insulating and antireflecting, it can be used in, for example, solar cells and batteries.

Due to its early stage, SAF’s business model is still under development, and discussions are being held regarding applications that are suitable from a short-term and long-term perspective. When it comes to the latter, the main objective is to develop an algae-based wastewater treatment system that also produces algae biomass that can be turned into biocrude oil. With regard to the short-term strategy, verification studies have shown that the silica shells could be sold as a high-value product. With the profit from this application, SAF will be able to finance part of the demonstration plant, where the algae biomass will be produced. A longterm plan is to develop an automated production plant where the algae can grow and be harvested. Today, SAF is holding discussions with an external actor on how to develop a harvesting technique which can be used for harvesting on a large scale. If this is practicable, there are plans that a third actor connected to the industrial automation industry will be involved. However, before this is attainable, SAF needs financial support to develop the initial demonstration facility.

Although SAF currently has no paying customers, involving potential customers at an early stage of the product development is one important way to sell in SAF’s vision and develop R&D collaborations. This can lead to new knowledge and hopefully future sales and business relationships. Today, several R&D collaborations are run in parallel to test various applications. In this section we have chosen to focus specifically on one collaboration that is related to biomass.

In 2014, SAF established R&D collaboration with Preem, Sweden’s largest fuel company with sales of petrol, diesel, fuel oil and lubricating oil.[2] This project was supported by Vinnova (Sweden’s Innovation Agency) and Imperial College London. The project aimed to evaluate if the biocrude oil developed from the algae biomass could be used in Preem’s refineries and hence see if it would be possible to transform the bio-crude oil into more useful products such as diesel and plastics. During this project, SAP and Imperial College came up with results regarding the composition of the bio-crude oil, which they presented to Preem. By looking at the composition, Preem could confirm that SAF’s product was interesting and that there was a possibility of producing diesel and plastics from the bio-crude oil. Furthermore, Preem gave valuable feedback on the need to reduce the amount of nitrogen in the bio-crude oil. As a consequence, SAF changed its production process by adding one extra step—to extract the proteins in the bio-crude oil, thus lowering the nitrogen level.

SAF’s intention with this project was to develop a biomass application and build a customer relationship with Preem. By selling the bio-crude oil to Preem, the oil company would be able to produce diesel and other products in a more environmentally friendly way than with current refining processes. Even though it was proved that Preem could handle SAF’s bio-crude oil in its existing plants, Preem had no intention of continuing the R&D collaboration with SAF and, as a result, the relationship with Preem was gradually dissolved. However, the results from the project were promising and can be used as guidance for future R&D collaboration with other potential customers and, to date, they are discussing what can be learnt from this collaboration.

Discussions with a company in the plastics industry have now been initiated, where this actor sees itself as a future customer of SAF and is willing to co-finance SAF’s future demonstration facility. The company sees renewable energy as a limited resource, and it contacted SAF as it is interested in its energy solution. There are plans for tests and meetings with the parties concerned, hence a promising collaborative project for the future. Collaborating with customers on a long-term basis is also something that SAF perceives as important for the future. Table 5.2 summarises the R&D collaborations that have been studied in this case.

Table 5.2 Summary of R&D collaboration for Swedish Algae Factory


University of Gothenburg (research organisation)

Imperial College London (research organisation)



Company in plastics industry (customer)


Transfer knowledge about algae cultivation Joint research

Evaluate bio-crude oil from algae biomass

Evaluate bio-crude oil from algae biomass

Evaluate plastics from algae biomass


Idea/concept phase

Early design phase

Early design phase

Early design phase


Researcher involvement in SAF's R&D

Lab testing of bio-crude oil

Joint evaluation of test results

Plans for joint tests



Bio-crude oil Usefulness for refining

Bio-crude oil Usefulness for refining

Bio-crude oil Usefulness for plastics production

  • [1] CSE runs a master’s programme in entrepreneurship and business design at Chalmers Universityof Technology in Gothenburg.
  • [2]
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