Two companies believe they have the answers to the two sides of the algae to biofuel coin.

On the processing side, Gig Harbor, Wash.-based Inventure Chemical recently raised just under $2 million to fund a pilot plant for its algae to biofuel system.

And on the growth side, Gilbert, Ariz.'s Diversified Energy said this week it plans to build a small scale demonstration of its closed pond algae farm this fall.

Both are aiming for commercial scale processing and production within a year and a half.

"Our technology is, I would think, pretty straightforward," Mark Tegan, CEO of Inventure Chemical, told the Cleantech Group.

His company announced last week that it raised funds from Cedar Grove Investments, Brighton Jones Wealth Management and some undisclosed angel investors in a Series A round.

Tegan wouldn't go into detail on their algae process, but said next week the company starts pilot production at a retrofitted chemical plant in Seattle.

"Theoretically that system could probably generate a few hundred gallons a day," said Tegan, who comes to cleantech from the petroleum industry.

That volume depends on how much algae Inventure can get its hands on, and Tegan said there's not a lot of it being grown just yet.

Filling that need is Diversified Energy, which licensed an algae production system from Phoenix's XL Renewables, and is already breaking ground on its demonstration pond.

"We're going to have competitive yields, but a simple process," said Jeff Hassannia, VP of business development at Diversified Energy.

The company plans to use off the shelf farming systems, along with its proprietary Algae Biotape, to build scalable, and economical, algae farms.

The biotape is Diversified's unique, thin walled, polyethylene tubing, similar to conventional drip irrigation tubes.

The size of the company's fields will be standard agriculture fields. Hassannia said a farmer that's growing traditional crops will be able to look at the fields and say, "Alright, this is basically just another crop."

"It happens to be enclosed in this proprietary tubing, but, in essence, I'm watering it and it's growing on my field, and I've got to put mulch down and I have to worry about seasonal characteristics, so you may have different algae for different seasons," he said.

Once the company goes full-scale, Hassannia said they expect to be able to generate between 100 and 200 dry tons of algae per acre per year.

"You're going to need hundreds of acres, if not thousands of acres, meaningful sizes, for long-term commercial plants," said Hassannia.

Diversified said capital costs are expected to be $45,000 to $60,000 per acre for a commercial scale operation.

Diversified and XL Renewables are self-funding the demonstration phase, but are actively looking for strategic partners in the industry for their next, much bigger, pre-commercial farm.

Inventure is working with Arizona Public Service, an electric utility, and GreenFuel Technologies for its algae.

Cambridge, Mass.-based GreenFuel set up an algae to biofuel system last year at one of Arizona Public Service's power plants.

GreenFuel used the CO2 from the plant to grow algae, but was subsequently overwhelmed by the rapidly growing green stuff (see Bowling for GreenFuel [1]).

"Algae is just a very, very challenging feedstock to process," said Tegan.

But he said the technology they have now is efficient and simple.

"We can process, and we have processed, algae with varying fat and carbohydrate contents in various types, from saltwater to freshwater, from very small diameter, less than one micron algae, to big, fat algae, greater than 10 microns," said Tegan

He said they can make all the fat into standard biodiesel, and also further process the algae and take the starches or cellulose and make fermentable sugar for ethanol.

"Between now and 10 years you could see a lot algae biofuel on the market," said Tegan. "It has the potential to compete with petroleum unsubsidized, at a much lower price per barrel. Which cannot be said about soy beans, or Canola, or corn, today."

And Hassannia points out that biofuel is just one possible use for an algae farm.

"[This has benefit for] anybody that's generating CO2," he said. "Or you might have somebody that's generating dirty water, like a dairy farm," he pointed out, "or a wastewater treatment plant."

"There's a whole variety of people that could be classified as users for this, and I think that's the real attractiveness of this type of thing."