GreenFuel Technologies Corp. plans to close a Series C round as early as August and hopes to announce at least one U.S. project by next month, interim CEO Bob Metcalfe told Greentech Media on Tuesday.

The news came the same day that Metcalfe, inventor of the Ethernet and a general partner at Polaris Venture Partners, announced he is passing on the reins after about a year, longer than the few months originally anticipated.

The Cambridge, Mass.-based company, which plans to grow algae to eat carbon dioxide and make biofuel, has hired a former Dow Chemical executive, Simon Upfill-Brown, as its new head beginning July 14.

Upfill-Brown was the CEO of Haltermann Custom Processing, which Dow Chemical bought for $50 million in 2001, then became the general manager of Dow Haltermann, which spun out this year after earning $230 million in annual revenue. The specialty chemical company makes biodiesel, among other products.

"Simon is experienced, has managed big and small projects and is going to do a lot better job at running the company than I am," Metcalfe said. "We are looking forward to his arrival on July 14, not that I'm counting."

The company was looking for someone who had both expertise in biofuels and in growing a small company, and found those qualities in Upfill-Brown, he said.

"We looked hard; it took us a year," he said. "Adding Simon is part of the preparation for scaling the company - we refer to him as our scaling CEO. And the fact that Simon has been managing projects for customers also is helpful, because we're entering a project phase, where we're developing and scaling projects."

Metcalfe will remain involved with the company as head of the board, and Jennifer Fonstad, a managing director at Draper Fisher Jurvetson who currently chairs the board, also will remain on the board.

As he put it: "Jennifer Fonstad, who I put up to being interim chairman when she put me up to being interim CEO, is going to let me be chairman now."

John Quealy, a managing director at Canaccord Adams, said the new CEO is a good sign.

"Clearly the board saw some new potential in the technology," he said. "Algae holds tremendous potential, and on Capitol Hill we've seen no will to claw back the cellulosic part of the ethanol mandates [even though some environmental groups have been urging Congress to reduce the overall ethanol requirement]."

Chatter about algae-based biofuels picked up last spring and then died down based on challenges such as the difficulty of yielding large amounts of algae at an affordable price, he said. But $4-per-gallon gasoline is making many technologies more attractive again, he said.

"From a business standpoint, it's good to see GreenFuel hiring a CEO, getting money and looking for more," he said. "It's encouraging the board sees value in attracting a CEO with a pretty good resume. It's good to see GreenFuels come back to life."

GreenFuel brought Metcalfe on board after the company shut down its algae greenhouse in Arizona. The algae grew faster than expected and than they could be harvested, causing them to die, and the company found its system would cost more than twice its targets, according to Xconomy.

At the time, the company expected it would restart the pilot project for further testing. Metcalfe this week said the company did restart the project, operated it successfully, and then decommissioned it again last summer.

The project was located at four gas-fired power plants, called gas peakers, that are used only during times of peak demand, he said. "That means that a lot of the time, they're not running and not producing CO2, and so the algae are out of luck."

He said the company plans to move toward projects at coal-fired power plants that are used for baseload power, meaning they would run regularly and not just during times of peak demand.

GreenFuel hopes to announce one or two U.S. projects this month or the next, Metcalfe said. One has been signed, but not yet announced, while the other has been announced but not yet signed, he said.

In the latter case, he's referring to a project at an ethanol plant in Shenandoah, Iowa.

In April, the Iowa Power Fund board authorized final negotiations for a state grant worth up to $2.18 million for the first phase of a project to build an algae pilot plant at a Green Plains Renewable Energy ethanol plant, according to The Gazette. If the project is approved, GreenFuel would use the ethanol plant's wastewater, carbon dioxide and waste heat to grow algae, which would then be processed into biodiesel, the newspaper reported.

While Metcalfe wouldn't give more information about the other project, he said both are "development and scaling" projects, which mean the partners recognize the technology risk and are willing to share it.

The projects will start with a 100-square-meter reactor, then scale up to 1,000 square meters, then 1 million square meters, he said, adding that at 1 million square meters, or 100 hectares, the project would finally be at commercial scale.

"These are not financing projects where the technology is proven and it's just a matter of scaling it," he said. "The projects have the potential to be quite large if we're successful in our development, but we are still in development, we are not in commercial scale and will not be for another two to three years, with luck."

Until then, the company is working with "minuscule" amounts, he said.

It has operated 100-square-meter bioreactor in Cambridge since Oct. 1 and is constructing a second 100-square-meter bioreactor pilot, which it expects to complete around June. The company hopes the reactor will be able to produce quadruple the amount of algae per meter, he said.

If successful, the second bioreactor will be the model for the first phase of each of the U.S. projects, he said.

"Some of our fellow algae companies are bragging that they can produce a thousand gallons per day," he said. "We can't even produce a thousand gallons once, let alone every day. We're not at the ton level, we're at kilograms - a kilogram is just a liter of water - and sometimes we actually talk grams.

"We've had biodiesel made from our algae oil, but only in sample quantities that fit into a beaker. It is the goal of our company to change that situation."

Meanwhile, GreenFuel is adding expertise and resources, such as Upfill-Brown, as it enters the project construction phase, he said.

The company has grown from 26 employees a year ago to "the low 30s" now, and is raising its Series C round of funding.

Last July, when GreenFuel entered what it called its "interim period," Metcalfe had set out a seven-step plan for recovery, which among other steps included immediately cutting about half its team, raising interim cash, finding a new CEO and closing a Series C round, which it then anticipated doing by the end of the year.

The company in May announced it had raised $13.9 million in an extension of its Series B funding round, which originally closed in 2005 (see Funding Roundup: Solar, Biofuels Dominate Light Week). The company has raised more than $73 million since 2001.

Metcalfe, who pointed out that the Series C round is the only step of the plan left to be completed (also see Xconomy post), said he will either close the outside-led round in August or Upfill-Brown will close it next year.

He said he doesn't yet know how big the round will be. The company is "praying and hoping" to get two term sheets in July, and the amount will be up to the new lead investor, he said.

"It won't be $3 million and it won't be $100 million, but it'll be in that range," he said with a laugh.

Metcalfe pointed to Sapphire's $50 million raise announced in June.

"That has affected how much we think we should be raising; maybe we should think of a way to spend 50 million smackers," he said jokingly. "In all seriousness, [the amount] is fluid. We have a number of developing and scaling project partners. In our previous model, we don't have to raise $50 million, but we're looking at careful uses or proceeds that might justify such a fund raising."