EdeniQ: Silicon Valley meets the Mississippi River Valley in California’s San Joaquin Valley

High tech and high practicality converge at EdeniQ – cellulosic ethanol via retrofits or bolt-ons to existing corn and sugarcane ethanol plants.

Next month in Visalia, California, in the heart of California’s San Joaquin Valley, EdeniQ and Logos Technologies will officially debut a cellulosic ethanol pilot plant, funded jointly by the DoE and EdeniQ with Logos as the prime contractor, that is worth a very close look.

EdeniQ: From California's Silicon and San Joaquin Valleys, a technology deployable across the Mississippi watershed's ethanol fleet

It’s a little bit country, a little bit rock ‘n’roll, which is to say that it has a one foot firmly planted in the first-generation ethanol fleet, and one foot well-planted in the world of cellulosic biofuels, and other advanced technologies funded by venture capitalists out of the Bay Area.

It’s Silicon Valley meets the Mississippi River Valley.

Like the iPhone, the hardware is going to deservedly attract a ton of attention at the outset, but it is the apps that are being deployed on top of that platform that may well be the defining factor in the platform’s ultimate viability.

From a hardware point of view, the CCM pilot plant is unique because all of the process equipment is skid mounted and shop manufactured in Michigan and then shipped to California for assembling into an integrated plant.

Moreover because the company’s focus is retrofit or bolt-on to the existing ethanol fleet, both in Brazil and the US. So, it’s capital-light, but with a broad geography and based on proven technologies that can be used in several combinations to lift yields.

Three technologies in one

From an app point of view, there are three technologies in the suite.

1. The Cellunator is an advanced, industrial-grade milling device. Placed between slurry and liquefaction, the Cellunator reduces larger particle sizes into optimally-sized particles and passes existing fines through the device without creating new fines. Commercially deployed since autumn of 2009, the Cellunator is delivering yield increases in the 3% to 4% range while at the same time reducing enzyme use by 40%.

Why it’s cool: Producers have long known that milling their corn into fine flour can increase yields, but they avoid doing so because of the expensive maintenance and performance issues fines cause.

2. Cellulosic fibers, liberated by the Cellunator, are converted into fermentable sugars by the Pathway cocktail.

Why it’s cool: Cellunator and Pathway technology, used in tandem, can be deployed at existing corn ethanol plants today, because corn kernels contain from 6% to 7% cellulosic fiber. In traditional corn ethanol production, the fiber is unprocessed, and is passed though the plant as an undesirable component of DDGS (animal feed). Used in conjunction, in testing, the Cellunator and Pathway technology has been increasing yields by 5%, with plans to move from testing to commercial release of the pathway enzymes in 2013.

3. High yielding yeasts to ferment both the xylose (C5) and glucose (C6) sugars into ethanol.

Why its cool: By inhibiting metabolic pathways that produce glycerol, EdeniQ has cultivated yeasts that produce more ethanol and 25% less glycerol. EdeniQ’s LGY yeasts are deployed today in Brazil, where they have delivered a 3% to 5% lift in sugarcane ethanol plants.

New funding

The company last week announced $32 million in new funding, and importantly among its new investors, you’ll find Koch FHR, the fifth largest ethanol producer in the US, and an investor in SG Biofuels. The total includes $9 million in debt and $23 million in equity from a closing up of the company’s Series B2 equity round and a partial close of its Series C Round.

What’s coming up next

Over the next twelve months, expect to see:

1. Continuing efforts to deployments of the Cellunator mechanical pre-treatment system, and deployment of services to Brazil plants for enzyme optimization.

2. For the Pathway enzyme system, we’ll expect an announcement as soon as the June opening of the pilot plant, of the identity of the group that EdeniQ is testing its enzyme system and more visibility on deployment of that system in 2013.

3. Low cost cellulosic sugars. The company started an R&D project focused on the production of low-cost cellulosic sugars. Expect some visibility on a path towards sub-15 cent cellulosic sugars, based on the company’s mechanical pretreatment system and a saccharification process that results in less inhibitor formation.

The Bottom Line

We see EdeniQ as an interesting bridge company – a developer of systems that can be deployed today in the existing US and Brazilian ethanol fleets, but bolts effectively onto the fleet to expand yields based on cellulose.

Not entirely different from the POET-DSM approach, but well suited to independent companies like Koch FHR, and equally well suited to deployment in Brazil.

In the short term, there’s going to be a lot of focus on opportunities in the US, but even more exciting are perhaps its opportunities in Brazil with cellulosic biofuels. Cellulose in Brazil – huge opportunities with tops, leaves and all that bagasse – as much as two-thirds of the cane harvest, by weight. But expect the Brazilians to be cautious on deployment until the technology is proven to work on a plant-by-plant basis.

As EdeniQ’s CEO Brian Thome says, “Every plant in Brazil has excess bagasse than it needs for co-generated power, and every plant can be engineered to integrate a cellulosic process into its existing process. But it’s a plant by plant analysis – every plant is different and sized. Every plant in Brazil is unique.”

It’s been a company that has been pretty stealthy the past couple of years while developing out its technology, but we expect that to change as the focus moves generally in the industry from technology development to commercial deployment.