Verenium, the cellulosic ethanol company that faced close to $440 million in deficits
only two months ago, announced this morning it has entered the commissioning phase of its new 1.4 million gallon 'commercial' scale ethanol refinery
in Louisiana. This is the first and largest completed cellulosic ethanol plant in the U.S., beating out Coskata's 40,000 gallon refinery
and Range Fuels's 10 million gallon vaporware plant
. Verenium's plant, which will test out a couple different variations of the company's technology, will convert agricultural waste from sugarcane production at a price close to $2 per gallon.
Differently from the small pilot facilities built so far, Verenium's plant is designed to run continuously as a commercial production facility. The plant will use a few different enzymatic combinations to break down bagasse from so-called 'energy cane', a variety with a high fiber and low sugar content that allows the plant to grow taller, increasing yield per plot. Verenium's goal is to perfect its enzymatic combinations with an eye towards selecting one for a series of 20 million to 30 million gallon commercial refineries it plans to begin construction on within the year.
To get around some of the feedstock availability problems that have plagued other ethanol producers, Verenium has begun working with farmers in Louisiana to produce energy cane on a commercial scale. The company will take advantage of the production incentives included in the recent Farm Bill to assist farmers in switching over from food crops. Energy cane is a perennial plant, which won't reach commercial production levels until two or three years from now - if planting begins tomorrow. This, combined with the fact that most commercial-scale cellulosic ethanol plants won't come online for at least the next three years, means the production incentives are essential for convincing farmers to grow crops to sell into a market that doesn't yet exist.
The problems Verenium reported in their March 10-K may evaporate as a result of their successful plant launch. The company was having issues attracting follow-on investment and project finance, while sinking most of its funding into the Jennings refinery. It appears they have managed to work through some of the costly technological problems at the plant, though they'll definitely need a considerable level of financing to bring their series of planned commercial plants online in the next few years. The Department of Energy will likely help defray some of this cost, as will incentives derived from the Renewable Fuels Standard. However, without private project financing, growth prospects will be significantly limited.