Verenium (NSDQ: VRNM), the cellulosic ethanol company that's undergone some shaky financial times, said Thursday that it was ready to start building its first biomass-to-ethanol plant in Highlands County, Fla.
The Cambridge, Mass.-based developer of enzymes and processes to convert plant waste into ethanol said it would break ground on the plant in mid-2009, aided by a $7 million grant from Florida's "Farm to Fuel" initiative.
The 36 million gallon-per-year plant, expected to cost between $250 million and $300 million, is expected to open in 2011 and will use as a feedstock grasses provided by Florida agri-business Lykes Bros. Inc., the company said.
The news puts Verenium in competition with cellulosic ethanol companies like Coskata Inc., Range Fuels, BlueFire Ethanol and others that are seeking to reach commercial-scale production.
Cellulosic ethanol made from grasses, wood chips, municipal waste and other sources is seen as preferable to ethanol made from corn, which now makes up the vast majority of U.S. production but has suffered from unfavorable economic conditions and environmental opposition (see The Year in Biofuels).
But the economic downturn and resulting credit crunch has led to some delays in the race cellulosic ethanol maker to be the first to reach commercial-scale production.
Warrenville, Ill.-based Coskata has said it hoped to open a $100 million commercial-sized cellulosic ethanol plant by late 2010, though it has since said it might push back that timeline to 2011 (via Earth2Tech).
In November, Coskata said it and U.S. Sugar Corp. had agreed to "explore" building a $400 million plant in Clewiston, Fla. to make up to up to 100 million gallons of ethanol a year from waste sugarcane material.
Irvine, Calif.-based BlueFire had planned to start building a $130 million ethanol plant in Mecca, Calif. this year (see BlueFire Ethanol to Build $130M Plant in Mecca). But the company recently postponed those plans by six months, saying it had raised only about $20 million of the plant's projected $100 million cost.
Broomfield, Colo.-based Range Fuels said in April it had raised $100 million to build a commercial scale plant near Soperton, Ga. The company uses a thermo-chemical process instead of enzymes to make ethanol from wood waste, and said the plant's first phase of 20 million gallons per year would be complete this year.
In the meantime, pilot-scale plants are underway. Coskata is building a $25 million, 40,000 gallon-per-year plant near Pittsburgh that it hopes to start up early this year. BlueFire also hopes to open a smaller, 3.2 million gallon-per-year plant in Lancaster, Calif. in August at a cost of $30 million.
And Poet, a maker of corn-based ethanol, announced last week that it had also opened an $8 million cellulosic ethanol pilot plant in Scotland, S.D. capable of turning out 20,000 gallons per year of fuel made form corn cobs.
As for Verenium, it announced earlier this month that its 1.4 million gallon-per-year pilot plant in Louisiana had started making ethanol from sugar cane stalks.
But the amount of cellulosic ethanol being produced at smaller pilot facilities is unlikely to meet shorter-term federal targets for the fuel.
A recent survey by investment firm ThinkEquity predicted that cellulosic ethanol companies will be able to supply only 28.5 million gallons by 2010, short of the federal government's100 million gallon goal (see Consumers to Pick Up Tab for Off-Target Cellulosic Ethanol Industry).
Verenium has seen its share of financial troubles. Earlier this week it announced it had regained compliance to be listed on Nasdaq, after receiving warnings last month that its failure to keep up a minimum market capitalization of $50 million could threaten its listing on the exchange.
The company reported a loss of $133.24 million on revenues of a $16.38 million in the third quarter of 2008, compared to a loss of $19.88 million on revenues of $10.86 million in the same quarter of 2007.
Shares of Verenium stood at $1.35 on Thursday, down from a 52-week high of $4.38.
Verenium will receive financial support from a deal it landed in August with oil giant BP (NYSE: BP), which agreed to invest $90 million in the company (see BP Invests $90M in Verenium for Ethanol).
BP planned to invest $45 million between then and August 2009, and also planned to spend $2.5 million per month over 18 months on a joint research and development project.