The World's #1 Renewable Energy Network for News, Information, and Companies.

Fulcrum BioEnergy secures $175M in Financing Commitments for MSW-to-biofuels Plant

In California, Fulcrum BioEnergy announced that it has successfully secured commitments and is proceeding toward closing $175 million in financing to fund construction of its first municipal solid waste (MSW) to low-carbon fuels plant, the Sierra BioFuels Plant, and to fund the development of future projects. The project is expected to be completed in 2015.

USDA loan guarantee and other sources

$105 million of the $175 million is the USDA loan guarantee, which the company secured in a conditional commitment in August 2012.

As Fulcrum VP of Administration Rick Barraza confirmed to the Digest, “We’re are continuing to move forward with this and I’d expect to see this close during the first half of 2013. The remaining $70 million is also a first half event.”

Dramatic reductions in opex; capex rising?

Fulcrum’s engineering and technology teams have recently made numerous enhancements to the design of Sierra and to its proprietary MSW to ethanol process. The Company expects these improvements will dramatically reduce its operating cost to produce renewable fuel to less than $0.75 per gallon at Sierra, down from approximately $1.25 per gallon as previously disclosed.

On capital expenditure for the first commercial plant, “we are still looking at $180 million [as overall project cost],” noted Barraza.

Note to readers: Yes, that’s not a typo. The project cost for the plant, which was projected last year at $120 million [at the time of the closing of Fulcrum's $75 million Series C financing round), appears to have jumped].

The cost of production at future Fulcrum plants is now expected to be less than $0.50 per gallon, down from $0.70 per gallon as previously disclosed. “These enhancements underscore our confidence in the attractive economics of our business model while further advancing Fulcrum as the industry’s low-cost producer of low-carbon transportation fuels,” added Macias.

Looking at the numbers

Generally speaking, capex is amortized over 15 years by most close observers of the industry — and with that, the company is looking at $1.14 in capex and $0.75 for opex, or $1.89 per nameplate gallon of capacity on plant #1 — well under the market price of ethanol.

That compares to $2.01 per nameplate gallon, last year at the time of the Series C financing, when the figures were projected at $120 million for capex and $1.25 per gallon for opex.

For future plants, the company is projecting that costs will decline to $1.64 per gallon — and perhaps more, if there are economies of scale in capital expenditure, or reductions in the engineered cost as design redundancies are reduced after operation at scale.

The December ethanol contract at the Chicago Board of Trade was $2.40 last week.

The January wholesale contract for RBOB gasoline last week on NYMEX was $2.73 per gallon. Generally, drivers consider that ethanol prices balance out with gasoline at around 70% of the price (owing to lower BTU values), which would put the break-even mark at $1.91 per gallon.

Withdrawal of IPO registration

With the news that financing had been identified outside of the IPO process for the company’s first commercial-scale project, Fulcrum confirmed (as had been widely expected) that they are pulling their IPO registration — for now.

Fulcrum President and CEO Jim Macias stated, “With our recent success in securing attractive sources of capital, we are proceeding with our planned development program. The current IPO market environment remains challenging, especially for development stage companies like Fulcrum. Because of this we have secured commitments from alternative capital resources to advance our MSW to renewable fuel program and we have withdrawn our registration statement. We intend to pursue an initial public offering in the future when market conditions are more favorable.”

Major Investors

Fulcrum is privately held and financed by US Renewables Group (USRG) and Rustic Canyon Partners (Rustic Canyon). USRG manages a portfolio of renewable power and clean-fuel assets, and Rustic Canyon is one of the largest venture capital firms based in Southern California.

Technology

Fulcrum’s proprietary process converts MSW into ethanol. This process, built around numerous commercial systems available today, has been tested, demonstrated and will be deployed on a commercial scale at facilities that Fulcrum will build, own and operate. Fulcrum utilize sorted, post-recycled MSW and convert it into ethanol using a two-step thermochemical process that consists of gasification followed by alcohol synthesis.

Gasification System

Fulcrum’s gasification system is comprised of a down-draft partial oxidation gasifier, a Plasma Enhanced Melter (PEMTM) and a thermal residence chamber that Fulcrum purchased from InEnTec. Fulcrum’s first plant, Sierra, will utilize three trains of this gasification system to convert the organic material in the MSW feedstock to a syngas consisting primarily of carbon monoxide, hydrogen and carbon dioxide.

Alcohol Synthesis Process

Fulcrum’s proprietary alcohol synthesis process incorporates a catalyst that was developed and is owned by Nipawin and SRC. The Nipawin/SRC catalyst is very similar to hydrotreating catalyst used in almost every refinery in the world. The catalyst contains no precious or rare earth metals and can be recycled by the catalyst manufacturer.

The Bottom line

The announcement puts Fulcrum very much on the fast track — and confirms that waste-to-energy continues to be one of the hottest sectors in all of biofuels — with a combination of low carbon fuel, a feedstock that even the most ardent biofuels opponent is delighted to find a better use for, willing strategics like Waste Management, and project traction.

More about Fulcrum via our 5-Minute Guide here.

This article was originally published on Biofuels Digest and was republished with permission. 

Lead image: Biofuels plant via Shutterstock

RELATED ARTICLES

UK Parliament Clean Energy Leaders

UK Government Names Clean Energy Cabinet Members

David Appleyard, Contributing Editor With the UK general election now over and a majority Conservative Party government in place, the re-elected Prime Minister David Cameron has now named key members of the government charged with steering the UK’s clean energ...
Microgrids

Coast to Coast and Across the Electric System, Microgrids Provide Benefits to All

Dick Munson, Environmental Defense Fund At the most obvious level, microgrids could disrupt today’s utilities and their regulated-monopoly business model, because they challenge the centralized paradigm. In a nutshell, microgrids are localized power grids that ha...
Alaska Airlines Biofuel

Alaska Airlines, Gevo To Demonstrate Renewable Alcohol-to-Jet Fuel

Jim Lane, Biofuels Digest

In Colorado, Gevo and Alaska Airlines announced a strategic alliance to purchase Gevo’s renewable jet fuel and fly the first-ever commercial flight on alcohol-to-jet fuel (ATJ).

Germany wind turbines. Credit: Shutterstock.

Germany's Powerhouse Feels Pinch of Merkel’s Shift to Renewables

Tino Andresen, Bloomberg North Rhine-Westphalia, the German state that’s home to utilities RWE AG and EON SE, is losing its standing as the country’s powerhouse as wind and solar energy begin to displace conventional sources. Electricity consumers ...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

International Fuel Ethanol Workshop & Expo

Now in its 31st year, the FEW provides the global ethanol industry with...

Green Energy Summer School: Introduction to Bioenergy

This introductory course gives a detailed overview of the principles of ...

23rd European Biomass Conference and Exhibition

A world class renowned event for dialogue between research, industry, po...

COMPANY BLOGS

US Energy Grid Review Finds Needed Upgrades Would Allow More Solar,...

Yesterday (April 21) the U.S. Department of Energy released the first Qu...

Environmentally friendly solutions for projects

geoAMPS joins the celebration of the worldwide observance of Earth Day o...

Clean Energy Patents Rise in 2014, Solar Tops others, Toyota and GM...

U.S. patents for Clean Energy technologies in 2014 were again at an all ...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS