When we visited next-generation ethanol startup Coskata’s pilot lab outside of Chicago in January, we learned about the startup’s deal with General Motors and its plans to build a 100 million-gallon-per-year commercial facility, which could go online as early as the end of 2010. This morning the Coskata team has announced that it is working with ethanol plant builders ICM, on that first commercial plant.
While the partnership isn’t surprising, it is significant in that the company is trying to move as fast as possible from the pilot stage to commercial production. In its pilot phase, the company will scale up a 40,000-gallon demonstration facility at its Warrenville, Ill.-based headquarters by the end of the year. The next step to move to commercialization is building this first plant with ICM.
Only after the ethanol startup has reached these levels of scale will the true cost reductions of its technology and production methods be known. The startup says it can produce commercial-scale ethanol for under $1 per gallon, made from either biomass (like energy crops switch grass), municipal solid waste or other recycled materials (like old tires, which is one reason GM is interested). At the pump the company claims its product could be anywhere from 50 cents to $1 per gallon cheaper than gasoline.
The company has strong backers to support those claims, including GM, and the best of Sand Hill Road in Khosla Ventures, Advanced Technology Ventures and Great Point Ventures. But only when the company gets to commercialization will these kind of prices be viable.