Biofuel Pain Could Be Primafuel's Gain

The next generation of the technology, which Primafuel expects to bring to the market next year, will purify oils and fats into food-grade quality and extract free fatty acids that could be used to make biodiesel, he said.

Further generations also will aim to make more products from the same bushel of corn, such as by turning glycerin into biochemicals for products such as bioplastics, biopolymers and stabilizers, he said.

Primafuel plans to design each new “clip-on” technology to plug into each other, so that customers can make incremental upgrades rather than having to buy whole new systems, and also is trying to design new technologies that will fit into other companies’ fat- and oil-extraction systems, he said.

Rick Kment, a biofuels analyst with research firm DTN, said the idea of making additional products at ethanol facilities makes sense.

“The purpose is to really try to maximize the value that comes out of the back end of an ethanol plant,” he said, adding that increasing this value could shorten the payback time, reducing the overall construction cost of a plant.

Kment added that he’s not sure the fractionation movement will end up being a significant trend in the market, and that it’s hard to pick winners among the different competitors at this early stage.

Growing the Market by Going Small
As in many other industries, a number of biofuel companies expect that the fuels would be cheaper to make in larger volumes.

But Primafuel disagrees. While the economies of scale may reduce the cost of converting crops into fuel at large biofuel refineries, they face two common problems: getting those materials to the plant and getting the fuel out to distributors.

The company thinks the solution is to go small, not big, with companies setting up larger numbers of smaller facilities that are sized to use the amount of biomass available nearby.

Aside from its waste-stream technology, Primafuel Solutions is also developing stand-alone biofuel refineries that are modular, so they can be made in a factory for potentially lower cost, and that are a standard size, as well as “skid mounted,” or welded onto a frame, so they can be forklifted and transported by truck.

Using thermochemical technology – which uses heat, pressure and catalysts, rather than enzymes, to convert the biomass into fuel – and an efficient reactor design, the company expects its refineries to cost less per gallon than current refineries, making it economical for customers to build smaller plants.

The idea is to make them easy to transport, so they can be located near the feedstocks, and what Iyer calls “appropriately sized,” so that companies don’t have to transport those materials long distances to feed the plant. The refineries could also be moved if the feedstock in one area runs out or if, say, a supplier moves or closes, he said.

“If you have to scale to massive sizes to make money and you have to truck in switchgrass, you have a problem,” he said in an interview in December. “You can’t move forestry from Tahoe very far or chaparral from L.A. very far. … Moving [woody biomass] too far is crazy.”

Kment said Primafuel’s idea could work if the company focuses on using byproducts from other processes – wood waste from a furniture plant, for example – where the production of ethanol is a byproduct rather than the main product of the plant.

“If they would use feedstock from an existing business, that would be economical because they wouldn’t have to make the capital investment they would have if they were building the whole structure just for the ethanol,” he said.

He doesn’t expect the model of smaller plants to overthrow the current dominance of larger ones.

“Larger plants, where ethanol is the main focus and core of the business, are still going to gain some efficiencies by being larger,” he said. “At the same time, if manufacturers [that are] not in the ethanol industry right now decide to put smaller ethanol facilities in as a way to add value to their waste product – rather than making ethanol production their core business – I think that will work.”

Aside from developing technology for conventional ethanol and biodiesel plants, Primafuel also plans to get into cellulosic biofuels with technology to convert woody biomass, instead of corn, into ethanol and other fuels. But the current market doesn’t support the investment needed for the mass commercialization of next-generation biofuels, Kment said.

The first application of the cellulosic technology will likely be to boost the profitability and sustainability of conventional biofuels by converting the lignans and other currently unusable parts of corn into ethanol.

Founded in 2005, Primafuel has until now mainly been focused on building biofuel infrastructure, such as railroad spurs to transport the fuel, and tanks and a warehouse in which to store and blend the fuel.

The company has been working to develop a large project, including both infrastructure and its first biodiesel refinery, at the Port of Sacramento.

The project, which is being considered for approval by the air quality district, originally called for a 60-million-gallon refinery made up of modules with the capacity to each produce 10 million gallons, but the total size of the project and the rollout of the modules is now being determined by the district, Iyer said.

Primafuel is financing its infrastructure projects through debt financing, rather than through venture capital.

The company previously raised an unannounced Series A round from an unnamed Silicon Valley venture firm. In December Iyer said Primafuel was pursuing a second round, but last week he said the company hasn’t yet closed a second round and plans to wait and see if it’s needed.