solazymelogoThe Pentagon announced today that it has chosen San Francisco-based biofuel company Solazyme to supply the Navy with jet fuel made entirely of algae derivatives. This isn’t the first time it has worked with the military, having already had its research and development funded by the Navy in exchange for 20,000 gallons of fuel for its ships.

The oils produced by Solazyme’s algae act as a full replacement for petroleum-based fuel, not simply an additive. Some of its byproducts can also be converted into consumer and industrial chemicals, including food additives and cosmetics.

As per the Navy contract, Solazyme will be working with Honeywell-developed technology to provide 1,500 gallons of algae-based jet fuel. The fuel provided would probably retail for $200,000. The 20,000 gallons of ship fuel was valued at about $8.5 million.

Solazyme competes with companies like Sapphire Energy — though the latter is more focused on producing algae-based fuels for cars and trucks. It may also come up against microbial biofuel companies like Coskata, LS9 and Codexis.

Solazyme has raised $72 millon in capital to date from Roda Group, Braemar Energy Ventures, Lightspeed Venture Partners, Harris & Harris Group, VantagePoint Venture Partners and BlueCrest Capital Finance.

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