This analysis focussed on the Danish Langsand Lax venture initiated in 2010, the first land-based RAS to begin to produce table-salmon commercially. Although a production of 700t if forecast in the first year of operation and there are plans to scale the operation up to 4000t/yr, this analysis is based on the current production capacity of 1,000t growing fish to a mean harvest weight of 4.5kg. Justification for the development at the Langsand site included proximity to existing engineering and farming skills, pre-existing environmental licenses associated with a previous aquaculture operation, infrastructure and other pre-conditions good for a rapid and on-cost build and availability of a generous government capital investment subsidy. Considerable thought was also put into use of cost-effective materials (e.g. use of sectional concrete surface mounted tanks) and low-cost procurement. Elements of the technology were also pre-tested by a sister company (Billund) in Chile.
A former 250t flow-through trout on the site was demolished and a co-located RAS eel farm converted to a hatchery permitting concurrent preparation of smolts for immediate stocking whilst the grow-out ‘Oceanus’
RAS was under construction by partner Billund Aquaculture (established in 1986, Billund has built over 100 RAS for 25 kinds of warm, cold, salt and fresh water fish in 25 countries). The hatchery, capable of supporting the planned production capacity of 4000t, yielded its first smolts in 2011 and the first salmon were harvested in January 2014.The farm uses low salinity salt-water (15-20ppt) extracted from a nearby fjord and also
RAS Technologies and their commercial application – final report Stirling Aquaculture Page 42 incorporates denitrication plant to increase recirculation rates. This modification was in part a response to concerns regarding waste-discharges into the fjiord by national environmental and fishing lobbies.
Capital and operation costs were further reduced by installing relatively few grow-out tanks; 8x 10m diameter tanks (used for smolt on-growing/ grading and depuration of the harvested fish) and 4x 17m grow-out tanks.
The post smolt-grow out period is around 10 months; with 5 months in each of the 10 and 17m diameter tanks. The companies CEO Thue Holm estimated that costs of the investment could have been double, if additional grading capacity had been installed for the grow-out phase48. The downsides of this compromise include higher risk associated with failure of individual tanks and a wider range in the size of the harvested product ranging from 3 to 6 kg (mean 4.5kg). Although markets exist for smaller and larger salmon – clearly this does limit the ability for strategic market planning compared to cage-systems.
Production costs itemised in Table 6 are estimated at €1.65 per kg for basic operational costs rising to €3.10/kg (farm- gate dressed head-on bled on ice) including financing, depreciation and all other costs. This is slightly below the current farm-gate price for Norwegian salmon (around NOK 30). Holm accepts that his costs are between 20 - 30% higher than those of ‘the most efficient’ Norwegian salmon farm.
Profitability is therefore based on ability to secure a premium and scalability. Holme estimates that his product can secure a 30-40% premium in the ‘high-end’ food service sector based on sustainability attributes and a leaner product from exercised-fish cultured in flowing water. However scaling up to 4,000t clearly also risks saturation of this market. Initial target markets for air-freighted fresh/chilled include the UK, the USA and the Far-East. However, the company and its associates are already involved in plans to develop similar scalable installations in the USA (through a consortium called Atlantic Sapphire; planning for 16,000t/yr) and China (Billund Aquaculture; planning for 10,000t/yr) in which Langsand’s role as an incubation unit may alone justify its investment.
Production costs of €3.10/kg for the Langsand 1,000t/yr compare with only €1.40/kg costs (against wholesale prices around €2-2.50) for the 600t Fishion tilapia farm described in section 2.3 suggest that considerably larger-scale salmon RAS will be necessary for profitable operation compared to requirements for freshwater species such as tilapia and catfish.
The potential for scale economies in salmon RAS must also be evaluated in the context of developments in the cage-sector. As part of a long-term consolidation trend, farms in Scotland, Norway and Chile and have been growing larger in size with significant associated productivity gains, accompanied by the closure of smaller farms in more enclosed and environmentally sensitive water bodies. Marginal costs for this kind of up-scaling are likely to be considerably lower than for comparable increases in RAS scale. As there are no reliable reports of any RAS system having produced more than 1,000 t/yr to date, any claims around the scaleability of RAS systems remain largely a matter of supposition.
48http://www.aquacircle.org/modules/default.aspx?pageid=8&newsid=797 Figure 13: Large tanks at Langsand
Laks RAS salmon farm in Denmark (Source Atlantic Saphire)
RAS Technologies and their commercial application – final report Stirling Aquaculture Page 43 A report on closed containment, commissioned by the Canadian Government49 concluded that Pacific salmon can be raised profitably at scales of 1/5th to 1/10th of the ‘1,000t’ minimum for Atlantic Salmon as they are less commoditised and ‘provide better opportunities for niche marketing’. However, the rise of Atlantic salmon is also a consequence of fundamental product attributes suggesting even greater potential for saturation of the niche-markets for these substitutes. The report finally concludes: ‘closed containment systems have proceeded far enough along the innovation chain that government funding of commercial-scale demonstration projects is now necessary before full commercial deployment can be expected by the private sector.’
Table 6: Estimated operational costs for production of 4.5kg salmon (LWE) from a 1,000t/year capacity salt-water RAS – excluding labour and financing costs (source Langsand Lax)
Item Price € Units & unit costs
Smolts (including egg cost) 0.47 125g individual smolt weight
Feed 5.25 €1.15/kg smolt feed: (EFCR 1,05)
Oxygen liquid 0.31 €0.18/kg oxygen
Energy 0.71 €0.10/kg (kWh)
Heating and cooling 0.11 €0.10/kg (kWh - heat pump)
Carbon source 0.26 €0.4/ litre (alcohol)
Iron chloride 0.06 €0.54/ litre
Polymers 0.2 €2.68/ litre
Sludge 0.09 €13.5/ ton removed
Base buffers 0.08 €0.17/kg (lime)
Total 7.38 Per fish @ 4.5 kg mean harvest weight
Total 1.65 Per kg of fish LWE
49Parliament of Canada 2012 Closed containment salmon aquaculture report
http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=5994887&Language=E&Mode=1&Parl=41&Ses=1&File=84
RAS Technologies and their commercial application – final report Stirling Aquaculture Page 44
5 Potential for commercial RAS in HIE area