Fulcrum Clears Financial Hurdle to Rev Up Construction in 2013

Three years after announcing its breakthrough in converting MSW to ethanol, Fulcrum BioEnergy appears to have secured all the funding necessary for its first MSW to low-carbon fuels plant in Storey County, located 20 miles east of Reno, Nev.

The Pleasanton, Calif.-based company landed a $105 million loan guarantee by the U.S. Department of Agriculture in August. Fulcrum originally filed a registration for an initial public offering with the Securities and Exchange Commission in September 2011 but rescinded its filing later.

Courtesy: Fulcrum BioEnergy

“The current IPO market environment remains challenging, especially for development stage companies like Fulcrum,” President and CEO James Macias said. “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we have secured commitments from alternative capital resources to advance our MSW to renewable fuel program and we have withdrawn our registration statement.”

Fulcrum also closed an equity investment agreement with Waste Management in November 2011 that could provide up to $70 million for the Sierra BioFuels plant. The proposed plant is expected to produce close to 10 million gallons of ethanol each year. The company secured its feedstock and entered an offtake agreement for the plant in 2009. In addition to ethanol, the Sierra BioFuels plant will produce its own renewable energy to run the plant.

Fulcrum uses a two-step process to convert post-recycled MSW into ethanol. An InEnTec downdraft partial-oxidation gasifier is used to convert the sorted MSW to a syngas. The syngas then runs through a catalyst in Fulcrum’s proprietary alcohol synthesis process which it developed with Nipawin and the Saskatchewan Research Council before the ethanol is finally separated and purified.

The basis of Fulcrum’s business strategy is to secure zero-cost feedstock agreements around the country, thus giving it a competitive advantage over those who use corn or other forms of biomass. While Fulcrum has only just started construction on its Sierra BioFuels plant in Nevada, the company currently has feedstock agreements in 23 other cities across the U.S.

Better BTU: Fulcrum’s turning point was landing the $105 million loan from the USDA. The government has laid out significant dollars in an attempt to jumpstart development of biofuel technologies that utilize non-food feedstocks.  While we’d still like to see the industry focus on clearing one hurdle – clean, economic and efficient gasification – before approaching the next, we like Fulcrum’s business approach. Still a lot has to happen if the plant is to be in production by the end of 2013, as the company states. We’ll be keeping our eyes peeled for news out of Nevada.

Recommended Reading:

Fulcrum Secures $175M for Waste-to-Fuel Gasification Project – Waste Management World (Dec. 3, 2012)

$105 Million USDA Loan Guarantee for Waste-to-Biofuel Facility – Waste Management World (Aug. 7, 2012)

DoD's $3M Award to Sierra Energy Proves Commitment to Renewable Energy

Government involvement in developing the renewable energy industry has gotten a bad rap over the years.  Certainly no one reading this blog needs to be reminded of the Solyndra debacle. Several recent moves by the Department of Defense, most notably its announcement that it awarding Sierra Energy a $3 million grant prove that the U.S. military is undeterred and committed to investing in renewable energy solutions, and we here at the Better BTU are glad to hear it.

Sierra Energy's FasOx Pathfinder.
Courtesy: Sierra Energy

The federal grant will allow California-based Sierra Energy to build a commercial-scale waste gasification system at U.S. Army Garrison Forth Hunter Liggett in Monterey County, Calif. The company currently has a demonstration model of its FastOx Pathfinder at the Renewable Energy Testing Center in McClellan Park and also received a $5 million grant from California Energy Commission to build a waste-to-biofuels demonstration facility at the Port of West Sacramento.

Read our previous technology blog: On the Right Track: Sierra Energy Gets Smaller

Fort Hunter Liggett is one of a handful of pilot installation sites that are part of the U.S. Army Net Zero Program, which focuses on addresses sustainability and energy security challenges. The military has divided the program into three areas, targeting energy, waste and water. Fort Hunter Liggett is one of the six installation sites chosen to be net-zero energy. The post serves a double purpose, as it is also one of the six sites selected to be net-zero waste by 2020.

“This project is part of Fort Hunter Liggett’s ongoing efforts to meet Net Zero standards for both waste and energy,” garrison commander Col. Donna Williams said. “Disposing of the installation’s waste and using it to generate clean energy meets both those goals.”

The Department of Defense is the nation’s largest consumer of energy, spending $4 billion on energy bills per year. Part of the cost comes from managing nearly 2.3 billion square feet of building space in 300,000 buildings worldwide (EERE Annual Energy Management Report).

The grant to Sierra Energy isn’t the only example of the military spending money to try to reduce its carbon footprint (and hopefully some $$ further down the line). Better BTU wrote about Edwards Air Force base testing out the IST Gem, a shipping container-sized WTE unit (IST Energy - Finding its Niche).  The U.S. Navy has also signed an agreement with Biodico to develop advanced biofuels in an effort to reduce dependence on foreign oil.

Better BTU Take: We’ve heard the arguments against government involvement in developing private industry and don’t necessarily disagree with them but we are encouraged to see the military continue to dedicate funds to developing renewable energy through gasification. As the largest consumers, finding a solution will have a large impact both economically and environmentally and it may allow technologies to lower prices as companies begin to recoup costs from building No. 001 and 002.

Recommended Reading:

U.S. Department of Defense Selects Sierra Energy for 2013 Installation – Sierra Energy (Nov. 15, 2012)

Sierra Energy Lands Grant for Waste Gasification System – By Melanie Turner, Sacramento Business Journal (Nov. 16, 2012)

US Navy to Produce Biofuels, Bioenergy Worldwide – SustainableBusiness.com (Oct. 24, 2012)

Waste Reduction and Treatment in DoD Operations – Strategic Environmental Research and Development Program (SERDP)/Environmental Security Technology Certification Program (ESTCP)