Cool Planet takes big steps toward scale for waste-to-gasoline, soil amendment
USDA issues $91M loan guarantee conditional commit to Cool Planet.
Obama Adminstration back building of the company’s first commercial plant in Louisiana, as it opens its first commercial-scale Cool Terra operation in California.
“First of hundreds” says Cool Planet CEO.
In California, Cool Planet Energy Systems was issued a $91MM conditional commitment from the United States Department of Agriculture for a loan guarantee to support construction of the company’s first commercial manufacturing plant. The facility will be located at the Port of Alexandria, Louisiana.
Last year, Cool Planet Energy Systems CEO Howard Janzen said that the company will build three bio-refineries in Louisiana with a capital investment of $168 million. The projects will consist of modular biomass-to-gasoline refineries in the Port of Alexandria, Natchitoches and a site to be determined. Cool Planet will create 72 new direct jobs, averaging $59,600 per year, plus benefits. Additionally, LED estimates the project will result in 422 new indirect jobs, for a total of 494 new jobs. The company estimates 750 construction jobs will also be created by the project.
Back in February, Cool Planet Energy Systems broke ground on the Alexandria plant, dubbed Project Genesis. Permits have been received to begin earthwork and grading. The site was chosen because of its excellent wood biomass availability, interstate and rail access, and direct barge access to more than nine refineries. The facility is expected to produce at least 24 direct jobs and bring at least $56 million in economic investment into the state. Estimates are that an additional 150 indirect jobs will result because of this facility, and 350 construction jobs will be utilized.
“We expect this commercial plant to be the first of hundreds of plants that our company will build across the United States,” said Janzen. “From this process, we will also produce a co-product called CoolTerra which is an advanced soil amendment. CoolTerra enables agricultural producers to retain water and nutrients in soil to increase crop yields, and in drought conditions, to maintain their crop yields with significantly less water and fertilizer.”
Cool Planet broke ground on its first commercial facility at the Port of Alexandria earlier this year. Site preparation and detailed engineering design work is currently underway, and the company expects to start construction before the end of the year. Construction of the initial plant is expected to be completed by the end of 2015 with commercial operations beginning in early 2016. The USDA financing could play a role both in the first commercial deployment in Alexandria and subsequent expansion.
Cool Planet will utilize wood waste and forest byproducts to make gasoline at its initial commercial-scale facilities in Louisiana. Each bio-refinery will be capable of producing 10 million gallons of high-octane, low-vapor pressure gasoline for strategic distribution through existing market channels and for blending at Louisiana refineries.
In August, Cool Planet said expects to put out to tender later this year for construction of its first commercial waste-to-gasoline facility. It has already begun ground clearing ahead of the process. Front-end design work should be finished by November. The facility should start producing 1 million gallons per year beginning in 2016, later scaling up to 10 million gallons.
CoolTerra facility opens at commercial-scale
In related news, Cool Planet unveiled its first commercial-scale production facility for its CoolTerra soil amendment. The new manufacturing facility is located in Camarillo, California.
CoolTerra is a highly porous soil enhancer engineered to retain water and fertilizer for improving soil health and productivity. For farmers and growers in the Western U.S. and elsewhere, the commercially available amendment gives them the ability to maintain or improve their crop yield. Reducing fertilizer use also mitigates water pollution from farm runoff.
In a recent field trial testing the effectiveness of CoolTerra on high-value strawberry crops, CoolTerra increased production by 56 percent with normal watering levels and with 40 percent less fertilizer. In recent turf grass trials with a municipality, a one-time permanent application of CoolTerra enabled water use to be cut in half, while improving the overall appearance of the lawns.
“Based on the results of our scientifically-designed field trials and the early interest that we’re seeing from growers, we know that this advanced soil amendment offers a compelling solution for addressing drought conditions and water restrictions,” said Rick Wilson, Vice President, CoolTerra Business for Cool Planet.
“While untreated soil allows water and nutrients to evaporate or leach into the ground, away from the root zone of plants, CoolTerra retains water and nutrients in the root zone due to its engineered properties.”
“In addition to the results we’ve seen in drought-stricken California, we’ve also begun trialing CoolTerra in the Middle East to enhance crop yields in the arid desert climate,” said Janzen. ”And we’re actively exploring other international market opportunities.
The Cool Planet backstory
Earlier this year, Cool Planet announced that it has closed on its targeted $100 million Series D financing. North Bridge Venture Partners and Concord Energy were the lead investors for the round. The round added investors from Hong Kong, Singapore, the United Arab Emirates (UAE), and Mexico to a marquee existing investor base, including North Bridge Venture Partners, Shea Ventures, BP, Google Ventures, Energy Technology Ventures (GE, ConocoPhillips, NRG Energy), and the Constellation division of Exelon.
The news was a follow-up to the announcement last September that the company had raised $19.4M in the second close of a “D round” equity raise, after closing on more than $29.9M in June of 2013, bringing the total raised to more than $60 Million, including the remaining commitments from existing investors.
Why is the company getting such attention?
It’s a variation on low, lower and lowest. Low scale-up risk and infrastructure requirements for the fuel, lower operating cost per gallon of fuel, and lowest (which is to say, negative) carbon emissions.
The Bottom Line
The timelines have moved back — possibly related to financing. Originally the company was discussing a completion of construction on the first commercial in 2014 — now the word is late 2015 with start-up in 2016.
At the same time, the volume is ramping up more cautiously. The company continues to guide that the first commercial will have 10 million gallons in capacity, but the initial deployment will be in the 1M gallons range.
Also, there have been variances in the discussion around project cost — could be simply media confusion. Certainly we spotted a report in August projecting a $56 million tab for the construction cost of the first commercial, yet the loan guarantee is for a higher amount – $91 million in all. It may well be that the inatial project tender is for the first million gallons, and the overall project cost is higher. Or, the loan guarantee could cover 54 percent debt portion of the first three projects. We’ll wait to learn more.
We’ve said it before: The key, in so many ways, is in Cool Terra — a product that has to deliver a substantial market if Cool Planet is to reach its cost and emissions goals.
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