Remember cellulosic ethanol startup Verenium? Last we heard the company had started the commissioning phase of its cellulosic ethanol demo plant in May 2008, and it had big plans to start construction of a 30-million-gallon-per-year commercial plant in the middle of 2009. Well, a glowing story on the company came out in USA Today this week, which says the company just this week “cranked up” the demo plant. Verenium spokesperson Morgen Grandjean provided a few more details to us in an email and said the commissioning phase of the demo plant is 75 percent completed. The plant is currently producing small amounts of cellulosic ethanol at this time, but “the plant has not been running continuously.”
The USA Today article makes no mention of plans for a commercial scale plant. Instead, the story says Range Fuels’ commercial plant is expected to be the first in the U.S. later this year. Verenium’s Grandjean told us in an email that the company is “still slated to break ground on our first commercial facility in the second half of this year.” So, either the company failed to tell the USA Today reporter that information, or the reporter failed to include it. We would guess that, if the company does start construction of a commercial plant in the “second half of this year,” it will be more towards the end of 2009.
The USA Today story also doesn’t mention some financial hurdles facing Verenium: In December, the company put out an announcement that said it wasn’t in compliance with NASDAQ rules for maintaining a minimum market capitalization. The company had until this week to regain compliance; if it was unable to meet that deadline it could appeal or apply for transfer to the Nasdaq Capital Markets. We’re not sure what the company’s moves were.
The company has been spending very heavily. That’s not surprising given that Verenium is just turning on its demo plant and hasn’t started any considerable production yet, but for just the three months ending Sept. 30, 2008, the company reported a net loss of $133.24 million. And that loss was way up from the same period for 2007, in which the company reported a loss of $20.50 million. At this point the company has little revenue coming in; for the quarter ending Sept. 30, the company reported revenues of $16.38 million.
One thing Verenium does have in its corner is the promise of more funding from its partnership with biofuels bigwig BP (s BP). The deal with BP provides Verenium with $45 million in payments over the first 12 months of the agreement, and $2.5 million per month over an 18-month period. The deal created a special purpose entity called Galaxy Biofuels, which will have access to Verenium’s technology and will be jointly owned by BP and Verenium.
Verenium is actually better off than many companies trying to pioneer cellulosic ethanol in this difficult economic climate. BlueFire Ethanol told Reuters recently that it is delaying groundbreaking on its cellulosic ethanol plant in Lancaster, Calif., for several months.
Verenium’s coverage in the USA Today article positions cellulosic ethanol as a solution that is just around the corner. The article says: “Simply put, the nation will soon be running its cars, at least partly, on debris,” and also emphasizes that while corn-based ethanol makers are struggling, cellulosic ethanol makers are laying the groundwork for the next revolution. The cellulosic ethanol companies are struggling with many of the same things that the corn guys are facing in 2009 — especially access to capital. And even if those challenges are conquered, cellulosic ethanol won’t make much of a dent in the fuel supply for many years to come.