The funds have been matched by resource recovery company SANCON, the South Australian Research and Development Institute (SARDI) and Flinders University to total $4 million.

This will enable scientists to develop a Proof-of-Concept facility, exploring the viable production of microalgal biodiesel feedstock and high value co-products such as nutraceuticals.

The project, which has been driven by Associate Professor Rob Thomas (SARDI), will be led by Dr Sasi Nayar (SARDI) and Dr Wei Zhang (Flinders University).

SARDI and Flinders University are already recognised for having jointly developed a strong and coordinated research capability in Second-generation microalgal biofuels that positions South Australia to become a national and international leader in this area of R&D.

The project will include a facility on Torrens Island including four 50 square metre raceway ponds that will utilise nutrient rich saline water from the Port River estuary, carbon dioxide from adjacent power plants and solar energy to produce the products.

Assoc. Professor Rob Thomas says the scientists will be developing an elite algal strain for biodiesel production tapping into SARDI’s collection of native strains that show high oil production potential, and to optimise algal production systems, overcoming the current high costs of production, scalability, yield, harvesting and extraction technologies.

The project will also develop high-value co-products for feed, industrial or consumer applications.

Dr Nayar says microalgae can produce 30 times more oil per land area than traditional crops such as canola, using salty or nutrient-enriched waste water.

"We have to work out how best to grow it – whether in ponds or bioreactors," he said.

Microalgae key facts

• Microalgae are single celled microscopic organisms which, like plants, use photosynthesis to convert the sun’s energy into chemical energy.