Algae isn’t nearly ready for prime-time as a biofuel, according to a new study, and until it is the industry will need to seize upon non-fuel applications that could help make it cost-effective.

The Energy Biosceience Institute (EBI) at UC Berkeley came to this conclusion after what it called a “detailed techno-economic analysis” of algal biofuels production. Although more than “100 companies in the United States and abroad are now working to produce algal biomass and oil for transportation fuels,” the Institute’s press release said, “most are small and none has yet operated a pilot plant with multiple acres of algae production systems.”

image via Sandia National Laboratories

The report found that even under best-case scenarios, oil produced from algae will remain excessively expensive in the “near-to-mid-term.” Another challenge is that the industry is highly dependent on availability of suitable climate, water, flat land and carbon dioxide, all “available in one location.” When everything comes together — perhaps 10 years of research, development and demonstration from now, “algal oil production technology has the potential to produce several billion gallons of renewable fuel” in the United States.”

To bridge the gap, the report recommends a focus on co-products — for instance, producing algal biofuels in conjuction with wastewater treatment. Another possibility cited was animal feeds.

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